Qatar Economic Outlook

2013-2014
Qatar Economic Outlook
2013–2014
Copyright 2013 by the General Secretariat for Development Planning, Qatar.
Published June 2013.
General Secretariat for Development Planning, Qatar
Doha Towers
P.O. Box 1855
Doha, Qatar
www.gsdp.gov.qa
The content of this publication may be freely reproduced for non-commercial purposes with attribution to
the copyright holder.
DISCLAIMER: The views expressed in the Qatar Economic Outlook 2013–2014 refect the professional assessment of staf
members of the General Secretariat for Development Planning (GSDP). They do not necessarily represent the ofcial views
of GSDP or of the State of Qatar. While every efort has been made to ensure the accuracy of all data and information,
GSDP accepts no responsibility for errors in sources or in their reporting. The data cut-of for this report was 13 June 2013.
iii
Foreword
This Qatar Economic Outlook 2013–2014 presents forecasts
for 2013 and 2014.
Its assessment confrms the emergent role of the non-oil
and gas economy in driving aggregate growth and
in shaping other major trends. Declining yields from
maturing oil felds, coupled with gas output that is
capped by installed capacity, is likely to spell a gradual
retreat in output levels of the hydrocarbon economy and
a rising share of non-oil and gas. The General Secretariat
for Development Planning (GSDP) expects that a shift
from a marginal expansion of oil and gas production in
2013 to incremental decline in 2014 will nudge headline
growth down from 5.3% to 4.5% over these years.
Vigorous activity, however, is anticipated in the non-oil
and gas economy. Indeed, growth there could accelerate
through to 2014. A large infrastructure spending
programme that generates demand for cement, steel
and other materials, as well as for services, will provide a
stimulus to economic activity. A resumption of fast growth
of the population, which is expected to climb to 2.2 million
or more by end-2014, and an expansionary fscal stance
will also support growth from the demand side.
A rising population and strengthened demand are
already nudging up consumer price infation. In May
2013, prices had increased by 3.5% over 12 months,
largely owing to rising residential rents. Although GSDP
expects that infation will remain above recent historical
averages, it does not foresee continuing acceleration. In
annual average terms, headline consumer price infation
is expected to be about 3.6% in both 2013 and 2014.
Once again, the main risks to the short- and medium-
term outlook come from outside the domestic economy.
Interruptions to the shipping of hydrocarbon cargoes
could undermine Qatar’s long-term competitive
advantages in gas markets. Declining oil prices could
also exert a fscal squeeze—one that might be felt more
intensely in the context of rising spending commitments.
But a stout net asset position would help to shield Qatar
were such risks to eventuate.
Internally, intense construction activity—which places
hefty demands on land and other resources, and which
may require current infrastructure to be substantially
reconfgured—risks imposing congestion-related and
other costs on parts of the non-oil and gas economy.
The Qatar Economic Outlook 2013–2014 could not have
been written without the generous cooperation of
other agencies. I would therefore like to thank the Qatar
Statistics Authority, whose advice and provision of data
were invaluable; Qatar Central Bank; Qatar Petroleum;
the Ministry of Economy and Finance; the Ministry of
Business and Trade; and the Ministry of Municipality &
Urban Planning for willingly sharing information and
responding to requests for data.
H.E. Dr. Saleh Al Nabit
Secretary General
General Secretariat for Development Planning
June 2013
iv
Dr. Frank Harrigan, Director of the Department of
Economic Development, led the GSDP team. In the
department, inputs were provided by Sylvie Maalouf,
Eugene McQuaid, Habib Millwala, Dr. Issa Ibrahim and
Dr. Osama Noujoum. Reza Vaez-Zadeh provided technical
and analytical support. Research and administrative
support was provided by Hissa Ahmed Al-Assiry, Moza Al
Jasmi, Haya Al Semaiti and Jameela Hamad. Ali Suleiman
coordinated the report’s production.
Colleagues in the Department of Joint Services, led by
Hamad Rashid Al-Athba, and in the Public Relations and
Communications Unit, led by Asma Nasrollah Mirzaei,
facilitated the production and launch of the report.
Osama Al-Manasir assisted in designing graphics.
Jonathan Aspin copy edited the report and designed
the layout. Ali Barazi translated the English version into
Arabic, which Saleem Betar proofread.
Acknowledgements
v
Contents
Foreword iii
Acknowledgements iv
Qatar: Outlook at a glance 1
Part 1 Outlook for 2013 and 2014 5
Capsule summary 5
Economic prospects 5
Infation outlook 8
Fiscal outlook 10
Outlook for the balance of payments 11
Risks to the outlook 11
Consensus forecasts 12
Global economic prospects 14
Prospects for energy and commodity markets 16
Non-energy commodity markets 18
Part 2 Performance in 2012 21
GDP growth 21
Prices 25
Interest rates and credit 27
Fiscal accounts 27
Trade and foreign currency reserves 29
Terms of trade and the real efective exchange rate 30
vi
Qatar Economic Outlook 2013–2014
Tables
Qatar, outlook at a glance, 2013 and 2014 1
Table 1.1 Qatar, outlook at a glance, 2013 and 2014 5
Table 1.2 Poll of economic forecasts for Qatar, 2013 and 2014, as of 30 May 2013 (%) * 13
Table 2.1 Government spending and revenue, FY2011/12 and FY2012/13 (QR billion) 27
Boxes
Box 1.1 Forecast methodology and assumptions 6
Box 1.2 Per capita income 6
Box 1.3 Future of oil production 8
Box 1.4 Labour productivity, 2006-2012 9
Box 1.5 MSCI Qatar Index upgraded to Emerging Market status 11
Box 1.6 Forecasts for infation, 2013 and 2014 16
Box 1.7 Oil and gas consensus forecast 19
Box 2.1 Income and terms of trade 22
Box 2.2 Summary of monetary, fnancial and institutional developments, 2012–2013 23
Box 2.3 The producer price index 25
vii
Figures
Figure 1.1 Share in GDP, 2013 and 2014 (%) 7
Figure 1.2 Contributions to GDP growth, 2013 and 2014, (percentage points) 7
Figure 1.3 Sectoral growth in the economy, constant 2010 prices (%) 7
Figure 1.4 Monthly headline and core infation (year on year, %) 8
Figure 1.5 Monthly infation (year on year, %) 10
Figure 1.6 2014 Fiscal balance under diferent oil and gas prices (% of GDP) 12
Figure 1.7 Global real GDP growth projections (%) 14
Figure 1.8 Regional real GDP growth projections (%) 14
Figure 1.9 Unemployment, eurozone (%) 15
Figure 1.10 International crude oil and liquid fuels, global demand and supply 16
Figure 1.11 Average weekly crude oil spot price ($ per barrel) 17
Figure 1.12 Average crude oil price ($ per barrel) 17
Figure 1.13 Natural gas price index (2005 = 100) 17
Figure 1.14 Spot price ratios: Crude oil to gas 18
Figure 1.15 Natural gas prices ($/mmbtu) 18
Figure 1.16 Non-fuel commodity price index (2005 = 100) 18
Figure 2.1 Nominal and real GDP growth (%) 21
Figure 2.2 Real GDP growth, GCC countries (year-on-year change, %) 21
Figure 2.3 Nominal GDP ($ billion) 22
Figure 2.4 Contributions to real GDP growth (percentage points) 22
Figure 2.5 Hydrocarbons and non-hydrocarbons, share in real GDP (%) 22
Figure 2.6 Hydrocarbons and non-hydrocarbons, share in nominal GDP (%) 23
Figure 2.7 Manufacturing output 23
Figure 2.8 Construction output 23
Figure 2.9 Services subsector growth (%) 24
Figure 2.10 Indices for utilities, services and population (2007 = 100) 24
Figure 2.11 Annual headline and core infation (%) 24
Figure 2.12 Annual infation (%) 25
Figure 2.13 Monthly headline infation (year on year, %) 25
Figure 2.14 Producer price index growth (%) 25
Figure 2.15 GCC stock price indices and S&P Global index (year-on-year change, %) 26
viii
Qatar Economic Outlook 2013–2014
Figure 2.16 QCB real estate price index 26
Figure 2.17 Real estate rentals, Doha (QR per square metre per month) 26
Figure 2.18 Total credit, private and public sector growth components 27
Figure 2.19 Commercial banks’ public sector credit 27
Figure 2.20 Growth of commercial banks private sector credit (year-on-year change) 27
Figure 2.21 Overall fscal balance 28
Figure 2.22 Fiscal expenditure growth (%) 28
Figure 2.23 Fiscal revenue growth (%) 28
Figure 2.24 Total government debt 29
Figure 2.25 Total trade growth 29
Figure 2.26 Current account 29
Figure 2.27 Real efective exchange rate index (2005 = 100) 30
1
Qatar: Outlook at a glance
Real GDP growth is expected to grow by
5.3% in 2013
The General Secretariat for Development Planning
(GSDP) forecasts that growth of real gross domestic
product (GDP) in 2013 will grow by 5.3%, marginally
above the forecast released in December 2012’s Qatar
Economic Outlook (QEO) Update.
This uplift is accounted for by a revision in expected
output of oil and gas. Pipeline gas production will
rise and unscheduled shutdowns (which held 2012’s
hydrocarbon output in check) are unlikely to be
repeated. Performance of the non-oil and gas sector will
match earlier robust expectations, growing at 9.8%, with
all components (industry, construction and services)
performing strongly.
In 2014, upstream oil and gas is expected to contract
as output from maturing oil felds tapers of and gas
production hits installed-capacity limits. This will shave
aggregate GDP growth, which is put at 4.5%. But growth
will continue apace in the non-oil and gas economy. While
refning and petrochemical activity will see little expansion,
cement and metal production will gather momentum,
spurred by demand generated by vigorous construction
activity, which will support manufacturing growth. A
fast-rising population and the requirements of escalating
project activity will underpin robust services activity.
Nominal income growth over the forecast period of
the QEO will be closely anchored to growth in the
real economy. Oil prices (to which the price of Qatar’s
hydrocarbon basket is linked) are expected to remain
elevated but seem likely to slip from the levels seen in
the recent past.
Qatar, outlook at a glance, 2013 and 2014
2013
a
2013 2014
Real GDP growth (%) 4.8 5.3 4.5
Nominal GDP growth (%) 5.3 8.6 4.6
Consumer price infation (%) 3.5 3.6 3.6
Fiscal surplus (% of nominal GDP) 5.4 8.1 4.7
Current account surplus (% of
nominal GDP)
25.7 26.5 21.7
a = Forecasts made in QEO 2012–2013 Update in December 2012.
Source: Estimates from the General Secretariat for Development Planning.
2
Qatar Economic Outlook 2013–2014
Per capita income is set to come of
recent peaks
Although the level of real GDP is expected to climb,
so, too, is Qatar’s resident population. Burgeoning
infrastructure activity will create the demand for many
more workers. With virtually no slack in the domestic
labour market, most of these will be hired abroad.
By year-end 2013, it could be that Qatar’s population
approaches the 2 million mark, and a year later about
2.2 million or possibly more. With the population
expanding faster than GDP, per capita income (GDP
divided by the resident population) is set to decline.
Productivity gaps suggest the potential
for a future growth dividend
Each worker in Qatar’s non-oil and gas economy
produced less output in 2012 than in 2006. At an
aggregate level, measured output per head in that part of
the economy declined at an annual average rate of 4%.
While some sectors, such as manufacturing, have shown
steady productivity advances, declines are seen across
many others. Shifts in the structure of output and
employment towards activities with lower productivity
have also pulled measured overall productivity measures
down. However, to the extent that hours worked have
declined, the quality of existing products and services
has risen, or new services and products are now being
produced, headcount labour-productivity measures may
mask true economic advances.
But taken at face value, low and declining productivity—
and low wages in the non-oil and gas, private-sector
economy—raises questions about incentives for
investment in mechanisation and skills upgrading, about
inducements for citizens to work in the private sector,
and ultimately about the desired size and quality of
Qatar’s expatriate population. It also hints that Qatar
could be operating below its potential. Closing the gap
to that potential could provide a future boost to growth
in the non-oil and gas economy.
Consumer price infation will rise, but
stay moderate
Consumer prices rose by 3.5% in May 2013 compared
with the same month in 2012. An end to rental price
defation (the rental price index reached a low in June
2012) and a subsequent pick-up in rents fuelled headline
infation. Increased demand for rental properties—
spurred by a rising population—explains rising rents,
3
Qatar: Outlook at a glance
particularly in lower- and mid-priced market segments.
As rents constitute over 30% of the consumer price
index, movements of residential rents reverberate
strongly through to the headline fgure.
The QEO expects that consumer price infation in
2013 will average 3.6% (against just 1.9% in 2012). This
forecast is consistent with somewhat higher infation
in the second half of 2013, but also anticipates that the
accelerating infationary trend seen since the second
quarter of 2012 will peter out by end-2013. However, with
a rising population and strong demand in the non-oil
and gas economy, there is also little immediate prospect
of a moderation in infation. Headline price infation for
2014 is kept pegged at 3.6%.
Continuing solid fscal outcomes are
expected
Qatar’s fscal position will remain frm, with a surplus
of 8.1% of nominal GDP in calendar year 2013. Despite
large programmed increases in both recurrent and
capital outlays, robust oil and gas revenues as well as
enhanced revenue mobilisation through taxes will
provide comfortable fscal headroom. Realised revenues
are likely to surpass budgeted revenues, as the latter
are based on conservative planning assumptions for oil
prices, which at $65 a barrel are far below current market
rates. If disbursements on capital projects fall short of
budgeted spending—as happened in 2012—the surplus
could exceed the forecast.
The overall surplus is expected to narrow in 2014 in the
wake of the substantial increases in capital spending
needed to keep Qatar’s capital projects on track. If
shortfalls appear in 2013 again, some catch-up might also
be expected in 2014. The QEO factors in further increases
in recurrent expenditure, which has been on a steadily
rising trend in recent years.
Despite surging imports external
surpluses remain strong
A rising population and substantial project-driven
demand for capital equipment and construction
materials will cause imports to swell in 2013 and 2014.
However, while that will eat into the trade and current
account surpluses, these surpluses—buttressed by
elevated hydrocarbon export earnings—will remain
considerable. The current account surplus for 2013 is
forecast to be 26.5% of nominal GDP.
4
Qatar Economic Outlook 2013–2014
External risks remain to the fore
The risks to this outlook emanate largely from external
sources. If events took a turn that interfered with Qatar’s
ability to freely ship its hydrocarbon cargoes through
the Strait of Hormuz, this could weaken its competitive
advantage in gas markets and reduce the resources
available to the state.
Oil prices remain a perennial source of uncertainty.
Recognising this, Qatar prepares its budget using
conservative forecasts for oil prices. GSDP estimates
suggest that in the face of large future spending
commitments, the “break-even” oil price for Qatar
will rise, narrowing Qatar’s fscal cushion. Still,
Qatar’s formidable net asset position and strong
creditworthiness would provide stout defences if
external developments soured.
Finally, delivery of a large number of big projects in a
confned geographical space poses challenges and,
unless well executed, could have adverse efects for
businesses in the rest of the economy. Congestion,
bottlenecks, disruption to services and the prospect of
cost escalation for materials might pose difculties to
frms and discourage new investments during a period
of intense construction activity.
5
Part 1 Outlook for 2013 and 2014
Broad-based expansion of the non-hydrocarbon sector will support forecast GDP growth of 5.3%
in 2013: services, manufacturing and construction are all seen growing by 10% or more. Faster
investment spending, an expansionary fscal stance and a continuing infux of workers will underpin
demand. Output in the oil and gas sector will climb by 1.4%, but favourable prices for Qatar’s
hydrocarbon basket will mean that the sector (as in previous years) contributes more to the rise of
nominal than of real income. In 2014, growth is expected to moderate to 4.5%. Although the non-oil
and gas sector will continue to show vigour, with a forecast pick-up in construction, output from
maturing oil felds is likely to contract, exerting a drag on overall growth.
Consumer price infation will step up in 2013—as a rising population pressures property rents—
averaging 3.6% for the year. A similar outcome is foreseen in 2014. The balance-of-payments and
fscal surpluses are set to remain healthy, but with higher projected spending the fscal “break-even”
price for oil will rise.
Capsule summary
Table 1.1 provides a capsule summary of the forecasts in
this Qatar Economic Outlook (QEO) on fve key economic
indicators for 2013 and 2014, comparing 2013 forecasts
with those made in the QEO Update in December
2012. (The forecast methodology and assumptions are
discussed in box 1.1.)
Economic prospects
Qatar’s economy is expected to expand by 5.3% in
2013 (slightly down from 6.2% in 2012) and by 4.5% in
2014. Despite this expansion of aggregate income and
output, per capita GDP is set to decline as a result of fast
population growth and of slowing labour productivity
(box 1.2 and box 1.4 below).
Receding oil production accounts for almost all the
growth moderation in 2013 (see just below). Gas
production will be capped by capacity constraints while
non-oil and gas output will, with some sector variations,
broadly maintain the momentum of 2012. Nevertheless,
projected growth for 2013 has been revised up from
the QEO Update, mainly because of a positive revision
to hydrocarbon output levels. Output of pipeline gas
is expected to be higher in 2013 than projected in
December and oil production is expected to fall more
slowly, as the oil felds closed for maintenance in 2012
resume operations, and output from Al-Shaheen, the
largest of Qatar’s oil felds, grows.
Table 1.1 Qatar, outlook at a glance, 2013 and 2014
2013
a
2013 2014
Real GDP growth (%) 4.8 5.3 4.5
Nominal GDP growth (%) 5.3 8.6 4.6
Consumer price infation (%) 3.5 3.6 3.6
Fiscal surplus (% of nominal GDP) 5.4 8.1 4.7
Current account surplus (% of
nominal GDP)
25.7 26.5 21.7
a = Forecasts made in QEO 2012–2013 Update in December 2012.
Source: Estimates from the General Secretariat for Development Planning (GSDP).
6
Qatar Economic Outlook 2013–2014
Box 1.1 Forecast methodology and assumptions
QEO’s forecasts are derived from an internally consistent
numerical representation of Qatar’s economy, based on
standard economic accounting and consistency checks. This
framework has been calibrated and updated with known
statistical outcomes for 2012. It is based on a fow of funds
model of the economy in which all sources of funds from the
diferent sectors of the economy are equal to the total uses of
funds.
The forecasts are based on assumptions about the
trajectory of oil and gas prices; production volumes of
hydrocarbons (including downstream derived products such
as petrochemicals, condensates and refned products); the
pace of growth of the global economy; government spending
patterns; the US dollar exchange rate; and international and
domestic interest rates. The major assumptions are shown in
the box table.
These assumptions are based on the best assessment of the
future, which is made by GSDP and which draws on expert
opinion derived from a wide range of sources. Assumptions
about Qatar’s interest rates are based on the declared policy
of the Qatar Central Bank. Data on budgetary outcomes
and prospects are based on information obtained from the
Ministry of Economy and Finance (MOEF).
Data for years beyond the current budget period (FY2013/14)
are obtained by extrapolation of the trends in actual
government revenue, expenditure and fnancing, and from
information about project activities that will extend into the
future. Assumptions about the external environment are
anchored on forecasts by the International Monetary Fund
(IMF) in its World Economic Outlook (WEO). Changes in either
the base data (estimates for 2012) or assumptions about the
trajectory of key variables will afect the results of the QEO’s
forecasts. The Risks section below looks at implications of
diferent oil and gas prices and government investment levels
for the projected outlook for 2013 and 2014.
Box 1.2 Per capita income
While economy-wide income is set to grow in 2013 and 2014,
rapid population growth is likely to mean that per capita
income will come of the peak reached in 2011 (box fgure  1).
The infux of foreign labour is estimated to have raised the
population to 1.96 million as of end May 2013, an increase of
9.3% over the same month in 2012 (box  fgure  2). The upward
trend is expected to continue in 2014, with the population
reaching about 2.2  million by year end. The bulk of the infux
is expected to enter the labour force, with the vast majority
entering low-productivity activities such as construction.
Box table Forecast assumptions
2012
a
2013 2014
Qatar
QCB’s overnight deposit rate (%) 0.75 0.75 0.75
Qatari riyal/$ exchange rate 3.64 3.64 3.64
Total budget spending (QR billion) 158.5 212.5 245.7
Current 116.3 140.1 159.9
Capital 42.1 72.4 85.8
External environment
Global growth (%) 3.15 3.3 4.0
US LIBOR, 6-month deposit (%) 0.7 0.5 0.6
Crude oil export price, $ per barrel 111.1 108.5 103.2
Japanese LNG price, $ per million British
thermal units (mmbtu)
16.6 15.5 15.2
a Preliminary estimates or actual.
Box fgure 2 Population
0.0
0.5
1.0
1.5
2.0
2.5
-6
-3
0
3
6
9
12
Growth (y o y , %) Total (million)
Dec
14
Dec
13
May
13
Jan
13
Sep
12
May
12
Jan
12
Sep
11
May
11
Jan
11
1.96
2.00
2.20
9.3
Forecast
8.9
10.0
Sources: QSA (http://www.qsa.gov.qa/eng/index.htm) and GSDP estimates.
Click here for chart data
Box fgure 1 Real GDP per capita
274,374
287,509
296,839
301,267
Forecast
260,000
265,000
270,000
275,000
280,000
285,000
290,000
295,000
300,000
305,000
-6
-4
-2
0
2
4
6
8
10
Growth (y o y, %) Per capita real GDP (QR)
2014 2013 2012 2011
-1.5
-4.6
8.3
-3.1
Note: Real GDP per capita is based on year-end population estimates.
Sources: Qatar Statistics Authority (QSA) (http://www.qsa.gov.qa/eng/index.
htm) and GSDP estimates.
Click here for chart data
7
Part 1 Outlook for 2013 and 2014
Over the past few years, both the internal terms of trade
(hydrocarbon prices relative to non-oil and gas prices)
and the external terms of trade (export prices relative to
import prices) have moved substantially in favour of the
oil and gas sector, resulting in a much larger cumulative
contribution by that sector to nominal than to real
income growth. The contribution to nominal income
growth is determined largely by external factors, i.e.,
movements in the price of oil and gas across diferent
markets, while the contribution to real income growth
refects the expansion of oil and gas output, which is
largely determined by domestic productive capacity.
In 2013, nominal GDP growth is again expected to
be faster than volume growth. Uplift in the expected
hydrocarbon export prices received by Qatar, in addition
to the higher volume growth, raises the forecast for
nominal GDP expansion over the Update estimate. But
in 2014, nominal growth is forecast to decelerate to 4.6%
owing to a predicted dip in global oil and gas prices, and
slower real growth.
The share of hydrocarbons in real GDP will remain large
but is expected to decline during the outlook period.
It is forecast to fall from 49.0% in 2012 to 44.2% in 2014
(fgure 1.1), as the sector’s growth rate slows to 1.4% in
2013 (from 1.7% in 2012) and output contracts by 2% in
2014. The contraction refects the continuing decrease
in oil production as oil felds mature (box 1.3), and as
liquefed natural gas (LNG) production levels out.
Non-hydrocarbon GDP (defned as all economic activity
other than upstream oil and gas production) is expected
to grow by a robust 9.8% in 2013 and 10.3% in 2014. The
growth is expected to be broad based, with services the
main contributor, followed by other industries (fgure 1.2).
Within the other industries sector (fgure 1.3), growth
in manufacturing, which accounts for the bulk of
other industries’ output, is expected to be 10.0% in
2013. Petrochemicals and refning activity contribute
over 40% of manufacturing output, with metals and
cement accounting for the bulk of the residual. In 2013,
availability of additional hydrocarbon feedstock, released
from other uses where it was excess to requirements, is
expected to lift production of petrochemicals, refned
products and fertilisers.
Although little further expansion of these three
subcomponents is expected in 2014, overall manufacturing
growth is still expected to grow by 7.6% that year.
Burgeoning demand by construction for cement and
metals will sustain manufacturing’s growth.
Construction activity will also be an important driver of
real growth in the non-hydrocarbon economy, and is
forecast to expand by 10.5% in 2013, accelerating to 12.1%
Figure 1.1 Share in GDP, 2013 and 2014 (%)
0
20
40
60
80
100
Services
Other industries (manufacturing, utilities)
Construction
Hydrocarbons
Nominal GDP Real GDP Nominal GDP Real GDP
30.9
õ.5
14.7
47.2
28.0
5.4
14.4
51.5
32.5
õ.9
15.1
44.2
õ.1
15.4
4õ.7
30.7
2013 2014
Note: Shares do not sum to 100% as agriculture and indirect taxes are too small
to show.
Source: GSDP estimates.
Click here for chart data
Figure 1.2 Contributions to GDP growth, 2013 and 2014,
(percentage points)
Services
Other industries (manufacturing, utilities)
Construction
Hydrocarbons
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
Real GDP Nominal GDP Real GDP Nominal GDP
GDP
2013 2014
4.õ
4.5
10.0 10.0 8.õ
5.3
4.2
0.8
2.2
1.7
4.2
0.9
1.8
-2.7
2.9
0.õ
1.4
0.7
3.1
0.8
1.1
-1.0
Note: Shares do not sum to 100% as agriculture and indirect taxes are too small
to show.
Source: GSDP estimates.
Click here for chart data
Figure 1.3 Sectoral growth in the economy, constant
2010 prices (%)
. .
-4
-2
0
2
4
6
8
10
12
14
2014 2013
Services Other industries
(manufacturing,
utilities)
Construction
and public
works
Oil and
gas
Agriculture
.
-.
.
.
. . .
.
Source: GSDP estimates.
Click here for chart data
8
Qatar Economic Outlook 2013–2014
in 2014. The pace of roll-out of Qatar’s large infrastructure
spending programme will pick up in the coming
years: the government is set to invest heavily in basic
infrastructure, particularly transport, including roads,
expressways, metro and rail. The construction of new
health centres and education facilities will also entail
heavy spending.
Private construction activity that is centred on residential
and commercial buildings, including new malls, hotels
and labour accommodation throughout Qatar, will also
fuel growth. GSDP estimates total investment spending
on infrastructure from 2013 to 2018 at $158.9 billion.
The services sector—the largest contributor to growth
in 2013 and 2014—is expected to expand by 10.0% in
2013 and 10.1% in 2014. GSDP’s calculations suggest
that Qatar’s population could grow from around
1.96 million (current at end-May 2013) to about 2.2 million
by year-end 2014, and anticipated new arrivals will
place substantial demand on services, and as well as
on utilities. Output in these two sectors is expected to
expand to accommodate added demand.
Growth in the fnancial services subsector should stay on
a stable upward path as insurance and Islamic fnance
continue developing and as banking benefts from the
business generated by vigorous construction activity.
Trade and hospitality are expected to grow with lively
conference activity and an increase in tourist arrivals
from within the region. The aviation subsector is likely
to see a new wave of expansion. The opening of Hamad
International Airport later in 2013 will also boost a range
of logistical and service-support activities.
Looking further out, growth in Qatar’s non-oil and gas
economy and its competitiveness will increasingly
depend on the gains that can be made in efciency and
productivity. Recent trends suggest the potential for a
growth dividend—if Qatar can lift productivity in this
part of the economy (box 1.4).
Infation outlook
Consumer prices are expected to rise faster in 2013 and
2014 than in 2012, when infation as measured by the
consumer price index averaged 1.9%. The index recorded
an increase of 3.5% in May 2013, year on year (fgure 1.4).
While infation measured year on year has been rising
over the past year, month-on-month data suggest that
infation may no longer be accelerating. Averaged over
the year, GSDP expects infation to reach 3.6% in 2013
and to remain there in 2014.
This pick-up over 2012 is primarily due to rising rental
costs, an index component that accounts for 32% of the
Box 1.3 Future of oil production
Declining oil production is likely to continue over
the short term. Qatar’s ofshore felds, particularly
Al-Shaheen, which has the largest ofshore reserves
and production in Qatar, as well as Al-Rayyan and Idd
El Shargi, have produced for over 17 years. As they age
their yields are expected to decline—likewise with the
onshore felds, in production for over 30 years.
However, active consideration is now being given
to investments in “enhanced and incremental” oil
recovery programmes, which would slow the rate of
decline. Initial technical assessments look promising,
particularly for Bul Hanine feld, and investments are
likely to go ahead.
Figure 1.4 Monthly headline and core infation (year on
year, %)
3.5
0
1
2
3
4
5
6
7
Headline Core
May 13 Jan 13 Sep 12 May 12 Jan 12 Sep 11 May 11 Jan 11
2.5
Source: GSDP estimates based on QSA Qatar Information Exchange database
(http://www.qsa.gov.qa/eng/FrequentData/CPI/2013/May/Press%20Realease%20
of%20CPI%20%20May%202013%20Eng.pdf ), accessed 13 June 2013.
Click here for chart data
9
Part 1 Outlook for 2013 and 2014
Box 1.4 Labour productivity, 2006–2012
Labour productivity in Qatar’s non-oil and gas economy fell
at an average annual compound rate of 4% during 2006–2012.
This outcome assumes that hours of work have remained more
or less stable (see Data analysis later this box).
Declining labour productivity may have been infuenced
by a raft of factors that will prove transient or be later
reversed, such as hoarding of labour that is excess to needs
in anticipation of a future pick-up in economic activity.
(Hoarding makes economic sense when there are high fxed
costs of recruitment and the training of new workers is costly.)
Recorded changes may also be infuenced by the selection of
the interval over which productivity has been measured.
The aggregate picture of course masks variations in sector
experiences, which the box fgure reveals by sector and
subsector (or activity), providing a more detailed view.
In several activities, each worker produced less in 2012 than six
years earlier. Building and construction—Qatar’s single largest
employer—saw declining labour productivity of 2% a year.
Much of that retreat occurred in the earlier part of the period,
with recent advances partly closing the gap to 2006 levels. In
contrast, manufacturing (a highly capital-intensive sector in
Qatar, dominated by petrochemicals and refning) improved its
labour productivity over the whole period, by an average 4%
a year. Somewhat surprisingly, the data suggest an erosion of
productivity in fnance and associated activities.
But difcult issues beset measurement of service productivity.
With the passage of time, the quality of services may improve
or benefts may be seen in
a wider variety of services
on ofer, or services may not
even be sold in the market—
all of which makes it hard
to draw frm conclusions
from this simple metric.
Thus the recorded decline
in the headcount metric
of productivity in some of
the more advanced service
subsectors could mask gains
accruing through advances in
quality and variety. Equally,
recorded gains in social and
government services need to be
interpreted with caution.
Outside oil and gas, the economy
is highly labour intensive. In
2006, 94.9% of the labour force
produced 54.4% of total non-oil
and gas output, a picture that
changed little over the six years.
Construction employed 39.7% of
the labour force yet accounted
for just 18.9% of non-oil and gas
output in 2012.
Estimates of construction
employment may indeed be
infated (some workers assigned
to the sector may actually be
working in low value-added
trading activities), but United
Nations data on construction
employment and output show that labour productivity in
Qatar’s construction is far lower than regional and global
benchmarks. If output and employment in oil and gas (a
highly capital-intensive sector) were added to this picture, it
would amplify observed imbalances.
Although labour productivity measures need to be interpreted
with care, if these data refect inefciencies and a non-oil
and gas economy operating below its potential, they could
point to potential dividends to be reaped from investing in
mechanisation and skills upgrading in the non-oil and gas
economy. Such investments are, however, unlikely to occur
spontaneously and would require changes in the incentives
faced by various actors in Qatar’s labour market.
From a longer-term perspective, falling productivity (and
the persistence of low wages) raises issues about future
competitiveness, the incentives for investment in knowledge
and human capital, the attractions of private sector
employment for citizens, and indeed, for the size and quality
of the expatriate labour force in Qatar.
Data analysis
Qatar labour force surveys—the last survey was conducted
in April 2012—capture important information such as labour
force participation rates among the working-age population;
workers’ age, gender and educational characteristics; main
activity of employment; occupation and skill characteristics;
and earnings. Households, including collective households,
are the basic reporting unit. The survey methods follow the
guidelines and standards
of the International Labour
Organization, which aids
international comparability.
Sample data are grossed up
to estimate totals for the
entire economy.
Dividing annual national
accounts estimates of value
added by labour force
survey estimates of total
employment in the same
activity produces headcount
measures of labour
productivity by activity.
Such measures have
limitations, of course.
They do not, for example,
capture variations in hours
of work and if, say, hours
of work decline—a pattern
observed in many advanced
economies—a headcount
measure will tend to
underestimate productivity
levels.
Similarly, measurement
errors are likely in assigning
workers to major economic
activities (although they are
unlikely to be large enough
to materially alter the
fndings).
Box fgure Non-oil and gas labour force productivity by
activity, 2006–2012
CAGR employment, 2006–2012 (%)
Social
services
30
20
10
10 20 30
0
5
5
15
15
25
25
Manufacturing
15.7%
Total non-oil and gas output
Building &
construction
18.9%
Household services
Electricity and water
Government services
C
A
G
R

o
u
t
p
u
t
,

2
0
0
6

2
0
1
2

(
%
)
Agriculture and
fishing
18.2%
T&C
11.3%
Finance
& others
18.3%
TRH
13.2%
I
n
c
r
e
a
s
i
n
g

p
r
o
d
u
c
t
i
v
i
t
y
Decreasing productivity
CAGR = compound annual growth rate; T&C = transport and communications;
fnance & others comprises fnance, insurance, real estate and business services; TRH
= trade, restaurants and hotels.
Each bubble represents an activity, whose percentage share in total non-oil and
gas output, given in the bubble, is depicted by that bubble’s area. In cumulative
annual averages over 2006–2012, the vertical axis records growth in sector output,
and the horizontal axis growth in headcount employment. Observations above
the 45-degree line indicate advances in sector labour productivity; those below,
declines.
Sources: Qatar labour force surveys and national accounts data.
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10
Qatar Economic Outlook 2013–2014
basket, as well as climbing entertainment, recreation
and culture, which has an 11% weighting (fgure 1.5). The
reversal of a declining trend in rental costs means that
core infation—which excludes rents, utilities and food—
is likely to fall below the projected headline rate (in 2013),
for the frst time since 2008. Factors that would help to
contain domestic price pressures include a frming of the
US dollar against major trading currencies, and a boost
to global food crop production due to more favourable
weather patterns than seen in 2012.
Infationary pressures are unlikely to abate in 2014 as
demand continues to build in the local economy. A
continuing infux of foreign labour needed to work on
Qatar’s large capital projects programme may push
rental prices still higher, especially in “afordable to
middle-income” housing, where availability is tighter.
Fiscal outlook
Qatar’s approved budget for the current fscal year (1 April
2013–31 March 2014) authorises record expenditure, 17%
above the budget for the previous fscal year (FY2012/13).
The bulk of the increase is in current spending, with wages
and salaries growing by 20%, although budgeted capital
expenditure also rises by 17%.
For this outlook, calendar rather than fscal year forecasts
are made of government revenue and spending. In
calendar-year terms, and comparing actual outcomes in
2012 with expected outcomes in 2013, total government
expenditure for 2013 is forecast to rise by 34.1%. But even
with this sharp rise in outlays, an overall surplus of 8.1%
of GDP is still expected in 2013, followed by 4.7% in 2014.
Solid hydrocarbon receipts and continued growth of taxes
will support revenues. Tax revenue is projected at 7.4% of
GDP in 2013 (up a notch from 2012), rising to 8.3% in 2014.
The non-hydrocarbon defcit (total expenditure minus
non-hydrocarbon revenue) is forecast to be 11.0%
of GDP in 2013. It will be fnanced by revenue from
hydrocarbons. In that sense, and despite an anticipated
overall sizeable budgetary surplus, fscal policy is likely
to be expansionary. The government’s objective is to
fnance its entire budgetary operations through non-
hydrocarbon revenue by 2020.
These fscal forecasts assume that government-spending
targets are largely met. Yet in FY2012/13, capital spending
fell far short of what had been budgeted. Targeted
spending for FY2013/14 constitutes a 75% increase
in outlays over actual spending in FY2012/13. Thus if
disbursements again fall short of budget, this will—if other
things remain equal—add to the projected fscal surplus.
Figure 1.5 Monthly infation (year on year, %)
-8
-6
-4
-2
0
2
4
6
8
10
12
May 13 Jan 13 Sep 12 May 12 Jan 12 Sep 11 May 11 Jan 11
Miscellaneous goods and services
Entertainment, recreation and culture
Transport and communications Medical care and health services
Furniture, textiles and home appliances
Rent, utilities and related housing services
Clothing and footwear
Food, beverages and tobacco
Consumer price index
3.5
Source: GSDP estimates based on QSA Qatar Information Exchange database
(http://www.qsa.gov.qa/eng/FrequentData/CPI/2013/May/Press%20Realease%20
of%20CPI%20%20May%202013%20Eng.pdf ), accessed 13 June 2013.
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11
Part 1 Outlook for 2013 and 2014
Outlook for the balance of payments
The external current account surplus is expected to drift
down in 2013 and 2014, but remain voluminous, at 26.5%
of GDP in 2013 and 21.7% in 2014, against 31.4% in 2012. A
reduction in hydrocarbon export revenue coupled with
strong demand for imports, driven by investment and a
rising population, will narrow the surplus.
These developments and an expected outfow of capital
to fnance investments abroad will lead to an overall
surplus that declines to $3.0 billion in 2013 and to $0.8
billion in 2014, down from $4.7 billion in 2012. Gross
foreign reserves are expected to stay at 5.8 months of
imports in 2013, falling slightly to 5.7 months of imports
in 2014.
These estimates were made before June’s decision by
Morgan Stanley Capital International (MSCI) to upgrade
Qatar’s equity market to “emerging” from “pioneer”
status. But as this reclassifcation does not come into
efect until May 2014, the headroom for additional
foreign infows into the market is still limited, and as
some institutional investors are already present in the
bourse, any additional capital infows from institutional
investment funds are unlikely to materially alter the
balance-of-payments outlook (box 1.5).
Risks to the outlook
The outlook for the forecast period is generally
favourable, but is subject to downside risks. The
probability of the risks being realised is low—but if they
do hit, their impact could be considerable.
Qatar is susceptible to the efect of spillovers from the
world economy through trade and fnancial channels.
Its prosperity depends, self-evidently, on gas and
oil production and exports. Any disruptions to LNG
transport due to a temporary closure of the Strait of
Hormuz, could have major repercussions throughout
the economy. The availability of large fnancial resources
provides some room for Qatar to withstand such events
(if they materialised), but protracted disruption could
weaken Qatar’s established competitive advantage in
global gas markets.
Downside risks to hydrocarbons prices are another,
but perennial, cause of concern. The damage to fscal
balances that would be caused by much lower oil prices
is, in future, likely to be amplifed by elevated spending
commitments, which will narrow Qatar’s fscal bufers.
Based on forecasts for 2014, which foresee far higher
spending outlays than in 2012 and 2013, GSDP estimates
that Qatar’s “break-even” oil price for fscal balance in
Box 1.5 MSCI Qatar Index upgraded to emerging
market status
On 11 June 2013, MSCI announced that it would upgrade
and reclassify the Qatar bourse’s index, giving it
“emerging market” status.
This decision follows initiatives that Qatar Exchange
has taken to improve market organisation, operational
efciency and regulation, and its implementation of a
functional delivery-versus-payment mechanism. The
upgrade may also have been infuenced by the moves
by major Qatar corporations to lift existing ceilings on
foreign equity ownership.
The revised classifcation will come into efect in May
2014. Qatar should have a weight of about 0.45% in
MSCI’s emerging market index.
As a result of the upgrade, institutional investors
managing emerging market portfolios will now try to
increase their presence in the Qatari market. Analysts’
estimates of the additional capital attracted to the
market range widely from $350 million to $1 billion, but
such fows are likely to arrive gradually and should not
pose serious challenges for liquidity management or
materially infuence balance-of-payments outcomes.
Opportunities to tap foreign institutional capital will
beneft both established companies and those seeking
to list on the exchange for the frst time. Over the longer
term, the increased scope for foreign participation in
the market should enhance its depth and liquidity, and
support private sector development.
12
Qatar Economic Outlook 2013–2014
2014 would be $67 a barrel (fgure 1.6). This calculation
assumes that prices received for gas cargoes move
in step with oil prices. Heavier spending, perhaps
triggered by cost uplifts of projects, would also eat into
the projected surplus, raising the break-even oil price.
GSDP calculates that an increase in capital outlays of
10% relative to the baseline forecast could (for given
revenues) cut the fscal surplus by one full percentage
point of GDP in 2014. Still, although the fscal surplus
could narrow sharply in response to a conjunction of
lower oil prices and higher budget outlays, risks to
the surplus on the current account of the balance of
payments would be distant.
The fnal risk to be considered comes from the scale
and complexity of Qatar’s planned infrastructure
project portfolio, as it presents challenges for logistical
management and coordination, especially within such a
confned geographical space. A variety of stresses could
emerge that would hit business in other parts of the
economy. The success of current eforts to strengthen
how asset delivery is coordinated and managed is
important to ensuring that the wider economy continues
functioning with least disruption during a period of
intensive construction activity.
Consensus forecasts
Following the practice initiated with the frst QEO in
June 2012, GSDP continues to poll third-party forecasts
on Qatar’s economy to showcase what others believe to
be Qatar’s prospects in the near future. A consensus—or
representative—view of Qatar’s prospects is obtained
as the mean/median of all the projections polled.
Consensus estimates are calculated for real and nominal
GDP growth and consumer price infation, the indicators
mostly commonly reported for Qatar (table 1.2).
For Qatar’s real GDP growth in 2013, the consensus mean
forecast is 5.4%. Views range widely from 4.2% (IHS
Global Insight and JP Morgan) to 8.3% (Citigroup). The
consensus view is that real GDP growth will accelerate to
5.7% in 2014. The range of forecasts for 2014 is somewhat
tighter, within a 3.6 percentage point margin.
For nominal GDP growth in 2013, slower growth in the
volume of the hydrocarbon exports coupled with a lower
outlook for oil prices in 2013 takes down the consensus to
6.0% in 2013, followed by a small decrease to 5.9% in 2014.
In terms of consumer price infation, the consensus
mean forecast for 2013 is 3.5%, rising by 0.5 percentage
points to 4.0% in 2014. The higher infation rates echo
the widely accepted notion that the trend of low steady
infation experienced in the past few years is set to
Figure 1.6 2014 Fiscal balance under diferent oil
and gas prices (% of GDP)
-.
-2
-1
0
1
2
3
4
5
$100 $90 $80 $70 $67 $65 $60
Crude oil price ($ per barrel)
.
.
.
.
-.
.
Source: GSDP estimates.
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13
Part 1 Outlook for 2013 and 2014
reverse and that prices will rise in the near future. Rents
are already going up and the high population infux in
2013 and 2014 will raise demand for and hence the cost of
services.
The dispersion of estimates (as measured by the
coefcient of variation) around the consensus value
remains quite large, as identifed in previous QEOs. In
particular, the coefcient of variation for nominal GDP is
striking, at 76.2% for 2014.
The wide range of nominal GDP forecasts stems from
the diferences in oil price assumptions underlying the
projections. Oil prices movements are extremely difcult
to predict (as seen in box 1.7 below).
For 2013, GSDP’s expectations are that real GDP growth
will be somewhat lower than the consensus estimate,
owing to assumptions about developments in the
hydrocarbon sector. As for nominal GDP, GSDP projects
a higher growth rate than the consensus view, a result
of the complexities in determining the expected
realised price for Qatar’s hydrocarbon export basket.
For 2014, however, the consensus values for both real
and nominal GDP are larger than those predicted by
GDSP (see Economic prospects above), again because of
Table 1.2 Poll of economic forecasts for Qatar, 2013 and 2014, as of 30 May 2013 (%) *
Economic forecaster Real GDP growth Nominal GDP growth Infation
2013 2014 2013 2014 2013 2014
Bank of America Merrill Lynch (May 2013) 5.0 4.9 … … 2.0 2.5
Business Monitor International (Feb 2013) 5.0 5.9 9.0 10.9 3.5 …
Citigroup (Mar 2013) 8.3 7.2 10.7 13.7 3.0 3.0
Economist Intelligence Unit (May 2013) 4.7 5.0 4.1 2.2 3.1 4.0
EFG Hermes (Feb 2013) 5.4 7.6 6.2 12.9 3.5 4.2
Emirates NBD (Jan 2013) 5.2 … 6.1 … 4.5 …
Fitch Ratings (May 2013) 7.0 7.1 3.2 5.0 4.2 5.0
HSBC (Apr 2013) 6.5 6.5 2.9 -1.0 4.7 5.0
IHS Global Insight (Apr 2013) 4.2 4.8 3.3 2.8 3.5 2.7
Institute of International Finance (May 2013) 5.1 5.3 6.9 8.9 3.0 3.6
IMF (Jan 2013) 5.2 5.0 3.7 4.4 3.0 4.0
JP Morgan Securities plc (May 2013) 4.2 4.0 … … 3.6 4.9
National Bank of Kuwait (Jan 2013) 5.0 4.9 5.1 5.5 3.4 4.0
Oxford Economics (Apr 2013) 5.0 6.0 12.9 5.4 3.9 4.3
Qatar National Bank (Mar 2013) 6.5 6.8 4.0 -1.0 3.7 4.1
Roubini Global Economics (Mar 2013) 5.0 5.0 … … 2.7 3.0
SAMBA (Dec 2012) 5.2 5.4 5.0 7.0 4.5 5.5
Standard and Poor's (May 2013) 6.0 5.5 7.1 6.6 3.0 3.5
Standard Chartered (Mar 2013) 4.9 4.8 … … 3.8 5.1
Consensus (mean) 5.4 5.7 6.0 5.9 3.5 4.0
Median 5.1 5.4 5.1 5.5 3.5 4.0
High 8.3 7.6 12.9 13.7 4.7 5.5
Low 4.2 4.0 2.9 -1.0 2.0 2.5
Standard deviation 1.0 1.0 2.9 4.5 0.7 0.9
Coefcient of variation (%) 18.6 17.9 48.7 76.2 19.3 22.2
* To include your institution’s forecasts in future compilations of this table, please contact smaalouf@gsdp.gov.qa.
... = No estimates for particular year/indicator.
Note: The World Bank and other forecasters that quote WEO and other secondary sources have been removed from this table.
Source: Consolidated from various reports and news articles.
14
Qatar Economic Outlook 2013–2014
the underlying assumptions for volume and prices of
hydrocarbon products.
GSDP expects slightly faster infation in 2013 than the
consensus fgure, based largely on the rapid escalation
of rents already seen in high-frequency monthly data.
However, it anticipates that infation will not grow much
in 2014, falling under the consensus forecast for that year.
Global economic prospects
In its World Economic Outlook (WEO) of April 2013, the
International Monetary Fund (IMF) revised down its
forecast for 2013’s global economic growth to 3.3%,
a decrease of 0.2 percentage points from its January
prediction, which was itself 0.1 percentage points below
the October 2012 projection (fgure 1.7).
The revision refects a slower than expected global
economic recovery in the frst quarter of 2013. The pace
may gather steam in the second half of 2013 as the “fscal
clif” appears to have been avoided in the US and the
threat of a eurozone breakup has receded. In Japan,
a new central bank governor has set a new growth-
focused policy. Robust growth in emerging markets, a
pick-up in demand in China and recovery in the Middle
East and North Africa (MENA) from the destabilising
efects of the Arab Spring will help to bolster global
growth in 2014, to 4.0% (unchanged from the two
previous forecasts).
Within the global average, the IMF has revised down
2013’s growth rates for all major regions, except for Latin
America and Developing Asia. Notably, growth for the
eurozone and US were downgraded by 0.2 percentage
points each. (Infation is discussed in box 1.6 below.)
Eurozone. The bloc continues to battle recession
(fgure 1.8). The downward revision in the forecast
growth rate stems not only from a weak periphery but
also signs of weakness at the core, with slowdown in
Germany and likely contraction in France.
The periphery continues to sufer. Although the risk of
a Greek exit from the currency union has receded, the
country has entered its sixth year of recession. A banking
crisis in Cyprus was the latest in a string of fnancial crises
that hit the bloc, although a bail-out was reached in
March 2013.
The responses by the European Union authorities
in managing the fnancial crises remain reactive,
formulated case by case, and often when the fnancial
markets force them to act. The lack of a framework for
managing fnancial crises and the absence of political
will to create a banking supervision union pose risks to
Figure 1.7 Global real GDP growth projections (%)
.
.
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Apr 2013 Jan 2013 Oct 2012
2014 2013
.
. . .
Source: IMF WEO April 2013 database (http://www.imf.org/external/pubs/ft/
weo/2013/01/weodata/download.aspx), accessed 17 April 2013.
Click here for chart data
Figure 1.8 Regional real GDP growth projections (%)
-0.3
1.9
1.6
7.1
3.1
-2
0
2
4
6
8
2014 2013 2014 2013 2014 2013 2014 2013 2014 2013
MENA Developing
Asia
Japan US Eurozone
1.1
3.0
1.4
7.3
3.7
Source: IMF WEO April 2013 database (http://www.imf.org/external/pubs/ft/
weo/2013/01/weodata/download.aspx), accessed 17 April 2013.
Click here for chart data
15
Part 1 Outlook for 2013 and 2014
the fnancial integrity of the eurozone. This is particularly
worrisome as banks in other eurozone countries,
including the far bigger economies of Italy and Spain,
may eventually require bail-outs and other forms of
fnancial support.
Spain is in a double-dip recession with unemployment
reaching 27% in April 2013. Unemployment has
continued to rise across the eurozone, reaching record
rates in Greece, Italy and Cyprus as well (fgure 1.9).
Nonetheless, it is expected that as the current phase of
fscal consolidation is completed, recession could start to
bottom and growth resume late in 2014.
Still, risks to economic recovery in the bloc abound,
including a deterioration in Spain’s political and
economic environment, negative sentiments in
international markets (following the formation of a new
coalition government in Italy) and lack of political will in
Germany to continue to support Greece—especially in
light of the signs of slowdown in the German economy.
United States. The latest WEO expects US growth to dip
in 2013 to 1.9% (see fgure 1.8). This forecast was made
before some more recent positive data, however, which
show that consumer optimism in the country is high:
US home prices posted their largest year-on-year gain
in April since 2006 and fnancial markets ended May at
record highs.
Growth was stronger than expected in the frst quarter of
2013 at 2.5% according to the Department of Commerce,
and the Labor Department reported that 175,000 jobs were
added in May 2013, an improvement on April’s (revised)
149,000. However, May’s job growth was still below market
expectations and, more important, lower than what is
needed to boost the recovery (the unemployment rate
rose by 0.1 percentage points to 7.6%).
Moreover, although the deal reached in the US Congress
in early 2013 forestalled the immediate impact of the
fscal clif, no progress has been made in alleviating
“sequestration”, or across the board cuts to federal
spending, the efects of which, including job losses and
subsequent slowdown in growth, are expected to kick in
in the second half of the year.
The net adverse impact of these factors may be
mitigated by continued quantitative easing (QE) by the
Federal Reserve. The current, third round of QE is set to
remain in place at least until the end of 2013 and perhaps
through 2015, with exit from the policy unlikely until clear
signals of economic recovery are discernible. However,
even with the more recent favourable developments, the
balance is likely to be on the downside, supporting the
WEO’s downward revision to the 2013 growth forecast.
Figure 1.9 Unemployment, eurozone (%)
0
5
10
15
20
25
30
Italy Cyprus Spain Greece Eurozone
Jan
13
Sep
12
May
12
Jan
12
Sep
11
May
11
Jan
11
Sep
10
May
10
Jan
10
Sep
09
May
09
Jan
09
Source: EuroStat Statistics database (http://appsso.eurostat.ec.europa.eu/nui/
show.do?dataset=une_rt_m&lang=en), accessed 26 May 2013.
Click here for chart data
16
Qatar Economic Outlook 2013–2014
Japan. A shift to growth-focused policies is under way.
In April 2013, Japan took a surprise decision to bolster
growth through QE and pursue a healthy infation target
of about 2%, with the hope of efectively reversing
15 years of defation. The jury on the adequacy of these
policies and on the political will to continue them as
necessary is still out, however.
Developing Asia. The IMF expects steady growth in
developing Asia, given a return to a healthy pace of
domestic demand expansion in China, and policy
improvements in India. The WEO forecasts growth in
developing Asia of 7.1% in 2013, slightly accelerating to
7.3% in 2014.
MENA. The April 2013 WEO revised down the earlier
WEO’s 2013 GDP growth forecast for the region to 3.1%.
Unlike previous years, the gap between growth rates
between oil exporters and oil importers is expected
to narrow from 3.8 percentage points in 2013 and
0.5 percentage points in 2013, and to disappear by 2014.
This closing is mainly due, among oil-exporting
countries, to slower growth as fuel prices weaken in the
face of higher global fuel stockpiles and as geopolitical
risks diminish; and among oil-importing countries, to a
modest resumption of GDP growth as they shrug of the
efects of social unrest in the wake of the Arab Spring.
However, a further escalation of the confict in Syria
could dampen this outlook.
In 2014, MENA’s GDP growth is expected to accelerate
to 3.7%, supported by strong government spending
in oil-exporting countries and a more stable political
environment in the oil-importers.
Prospects for energy and commodity
markets
Oil prices
The commodities price “supercycle”, which has seen oil
prices (among others) shoot up since 2001, could reverse
in the near future owing to increasing supply and slower
growth in demand.
Although world oil consumption was higher than
production in the frst quarter of 2013, the US Energy
Information Administration (EIA), in its May 2013 Short-
Term Energy Outlook, expected the demand–supply
position to switch in the second quarter. Global supply
is expected to rise further in 2014, comfortably matching
the foreseen rise in demand (fgure 1.10) that would
accompany a modest recovery of the world economy.
While Japan’s forecast growth for 2013 remains low
(1.6% according to WEO) and the EIA foresees declining
Box 1.6 Forecasts for infation, 2013 and 2014
Infation is projected to remain contained in 2013
and 2014 in all regions, as demand pressures recede
in advanced economies and a positive outlook on
the supply and stockpiles of both fuel and non-fuel
commodities implies lower global commodity prices.
Little infation is expected in food prices, as supplies
beneft from better weather prospects.
The WEO of April 2013 expects Japan to see a return to
infation in 2013 that will then accelerate in 2014 (box
fgure), owing to QE, a higher infation target and fscal
reforms. In MENA, sliding commodity prices will contribute
to a decline in infation from 2013’s double digits.
Box fgure Annual infation projections (%)
1.6
1.7
0.7
5.1
10.3
MENA Developing
Asia
Japan US Eurozone
1.4
1.8
3.6
4.8
9.0
-2
0
2
4
6
8
10
12
2014 2013 2014 2013 2014 2013 2014 2013 2014 2013
Sources: IMF WEO April 2013 database (http://www.imf.org/external/pubs/ft/
weo/2013/01/weodata/download.aspx), accessed 17 April 2013; for MENA,
IMF, Regional Economic Outlook Update: Middle East and North Africa: Defning
the Road Ahead (http://www.imf.org/external/pubs/ft/reo/2013/mcd/eng/pdf/
mena0513.pdf ).
Click here for chart data
Figure 1.10 International crude oil and liquid fuels,
global demand and supply (million barrels per day)
82.5
84.0
85.5
87.0
88.5
90.0
91.5
93.0
Consumption Production
Oct
14
Jul
14
Apr
14
Jan
14
Oct
13
Jul
13
Apr
13
Jan
13
Oct
12
Jul
12
Apr
12
Jan
12
Oct
11
Jul
11
Apr
11
Jan
11
Forecast
Source: EIA Short-Term Energy Outlook database (http://www.eia.doe.gov/steo/
cf_query/index.cfm), accessed 9 May 2013.
Click here for chart data
17
Part 1 Outlook for 2013 and 2014
Japanese oil consumption, the monetary stimulus
launched in April 2013 may result in higher economic
growth and greater than forecast demand for oil there.
Still, the expansion in global demand for oil will likely be
tempered by expected lower consumption in countries
in the Organisation for Economic Development and
Co-operation, attributed to the malaise in Europe.
Spot oil prices rose in the frst two months of 2013, but
declined sharply in April 2013. West Texas Intermediate
(WTI) reached $86.65 per barrel, its lowest since
November 2012, and UK Brent dipped to $96.84 per
barrel on 17 April 2013, a low it had not seen since
July 2012. The lower prices came at the time of the
announcement by the Chinese National Bureau of
Statistics of slower than expected GDP growth for China
in 2012 and a weaker global demand outlook (fgure 1.11),
highlighting the sensitivity of oil prices to expected
trends in the world economy.
Data from the IMF April 2013 WEO support the view that
the upward trend in oil prices seen over the past few years
has begun to reverse (see also box 1.7 on the oil and gas
consensus forecast). Spot oil prices are forecast to ease to
an average of $102.60 in 2013 and further to an average of
$97.60 in 2014 (fgure 1.12).
An increase in both non-OPEC oil supply and production
of tight oil—a light crude oil found in shale or tight
sandstone, hence the name, which came into play due
to the shale revolution in the US—will allow for supply
bufers. These factors, combined with the dampening
impact of the high prices in 2012 on oil demand, will
depress prices in the outlook period.
Gas prices
The WEO (April 2013) expects average natural gas
prices—a weighted average of Japanese, US and
European prices—to decrease by 2.5% in 2013, a
downward revision from its October 2012 forecast.
However, this decline does not necessarily signal a
reversal of the rising trend in gas prices over the last
three years, as the decrease is expected to be short-lived,
with gas prices rising by about 1.0% in 2014 (fgure 1.13).
As pointed out in previous QEOs, natural gas continues
to be sold at prices far below its energy equivalent parity
with oil—in efect, at a discount to oil (fgure 1.14). The
gas–oil divergence is set to remain, although it is likely
to narrow in the outlook period. The discount in gas
prices stems from the larger supplies of natural gas due
to higher than anticipated growth in the production of
shale gas in the US.
Figure 1.11 Average weekly crude oil spot price
($ per barrel)
30
45
60
75
90
105
120
135
150
US WTI UK Brent
1 Apr
13
1 Jan
13
1 Oct
12
1 Jul
12
1 Apr
12
1 Jan
12
1 Oct
11
1 Jul
11
1 Apr
11
1 Jan
11
1 Oct
10
1 Jul
10
1 Apr
10
1 Jan
10
Source: EIA Short-Term Energy Outlook database (http://www.eia.gov/dnav/pet/
pet_pri_spt_s1_w.htm), accessed 30 May 2013.
Click here for chart data
Figure 1.12 Average crude oil price
97.0 97.6
102.6
105.0 104.0
79.0
61.8
Forecast
-40
-20
0
20
40
60
80
100
120
Growth (%) Average crude oil price ($ per barrel)
2014 2013 2012 2011 2010 2009 2008
27.9
1.0
-4.9
36.4
31.6
-2.3
-36.3
Note: Average crude oil price is the simple average of three spot prices: Dated
Brent, West Texas Intermediate and Dubai Fateh.
Source: IMF WEO April 2013 database (http://www.imf.org/external/pubs/ft/
weo/2013/01/weodata/download.aspx), accessed 17 April 2013.
Click here for chart data
Figure 1.13 Natural gas price index
174
Forecast
-50
0
50
100
150
200
Growth (%) Index (2005 = 100)
2014 2013 2012 2011 2010 2009 2008
169
110
113
154
167
171
48.6
36.2
-36.9
3.4
11.0
0.9
-2.5
Note: The index includes European, Japanese and US natural gas price indices.
Source: IMF WEO April 2013 database (http://www.imf.org/external/pubs/ft/
weo/2013/01/weodata/download.aspx), accessed 17 April 2013.
Click here for chart data
18
Qatar Economic Outlook 2013–2014
The global natural gas market continues to display a high
degree of regional segmentation. The price is highest for
natural gas sold under long-term contracts linked to oil,
as in Japan, lowest if sold on the spot market, as in the
US, and within this range if sold through a combination
of these arrangements, as in Europe (fgure 15).
The demand for liquefed natural gas (LNG) in Japan has
eased as nuclear power plants are slowly coming back
on stream, following a complete shutdown in the wake
of the Fukushima earthquake and tsunami in March 2011.
This implies lower Japanese LNG prices in the outlook
period. In Europe, higher supply of spot-priced gas
supplies and lower demand are expected to bring prices
down for 2013 also. In the US, more robust gas demand is
expected to outpace the expanded supply of shale and
drive gas prices higher for the year.
Starting in 2014, however, global demand is expected
to increase, as companies shift to cleaner gas-powered
power plants as policies targeting lower carbon
emissions come into efect.
China, for example, has set itself an ambitious
decarbonisation policy and announced plans to place
an absolute cap on greenhouse emissions by 2016,
explicitly moving away from its reliance on coal to
cleaner energy sources like natural gas. India has already
begun substituting natural gas for coal, and has become
increasingly dependent on natural gas imports. The EIA
expects growth in demand to outpace the rise in natural
gas production, leading to higher prices.
Non-energy commodity markets
Global non-energy commodity prices are expected to
see further declines. According to the IMF (WEO, April
2013), the non-fuel commodity price index will decline
by 0.9% in 2013 relative to 2012 and fall a further 4.3% in
2014 (fgure 1.16). This downward movement is likely to
be driven by positive supply-side developments. Despite
healthy demand, food prices are expected to drop by
2.0% in 2013 on the back of normal weather conditions,
which will result in better food crops. Industrial and raw
material prices are also seen declining. However, metals
prices are expected to rise by 3% on improved demand
conditions, mainly in China.
Risks to the outlook remain, however. Food prices remain
elevated historically, and stockpiles are still low after
lower grain output due to bad weather in 2012 (heat
in the US, drought in Europe and Asia). Worse than
expected weather conditions would result in higher food
prices. Also, stronger growth in China may lead to supply
pressures and higher metal prices.
Figure 1.14 Spot price ratios: Crude oil to gas
26.7
0
10
20
30
40
50
60
Oil–gas price equivalent UK Brent: US Henry Hub
Mar
13
Jan
13
Nov
12
Sep
12
Jul
12
May
12
Mar
12
Jan
12
Nov
11
Sep
11
Jul
11
May
11
Mar
11
Jan
11
41.3
45.3
39.7
Note: Ratio above (below) range = gas sold at a discounted (premium) price.
Sources: World Bank Commodity Markets database (http://econ.worldbank.
org/WBSITE/EXTERNAL/EXTDEC/EXTDECPROSPECTS/0,,contentMDK:2157490
7~menuPK:7859231~pagePK:64165401~piPK:64165026~theSitePK:476883,00.
html) and EIA Short-Term Energy Outlook database (http://www.eia.gov/dnav/
pet/pet_pri_spt_s1_m.htm), both accessed 5 May 2013.
Click here for chart data
Figure 1.15 Natural gas prices ($/mmbtu)
0
4
8
12
16
20
LNG–Japan Europe US Henry Hub
Jan
13
Oct
12
Jul
12
Apr
12
Jan
12
Oct
11
Jul
11
Apr
11
Jan
11
Oct
10
Jul
10
Apr
10
Jan
10
Oct
09
Jul
09
Apr
09
Jan
09
Oct
08
Jul
08
Apr
08
Jan
08
Source: World Bank Commodity Markets database (http://econ.worldbank.org/
WBSITE/EXTERNAL/EXTDEC/EXTDECPROSPECTS/0,,contentMDK:21574907~m
enuPK:7859231~pagePK:64165401~piPK:64165026~theSitePK:476883,00.html)
accessed 5 May 2013.
Click here for chart data
Figure 1.16 Non-fuel commodity price index
(2005 = 100)
0
50
100
150
200
Industrial inputs Food and beverages Non-fuel price index
2014 2013 2012 2011 2010 2009 2008
151
Forecast
119
146
170
167
170
165
156
169
136
152
175
160
127
161
189
171
169
162
181
198
Note: Industrial inputs include agricultural raw materials and metals price indexes.
Source: IMF WEO April 2013 database (http://www.imf.org/external/pubs/ft/
weo/2013/01/weodata/download.aspx), accessed 17 April 2013.
Click here for chart data
19
Part 1 Outlook for 2013 and 2014
Box 1.7 Oil and gas consensus forecast
Hydrocarbons prices are notoriously difcult to forecast, and
market expectations have in the past been punctuated by price
surprises (box fgure). A comparison of the historical one-month
futures oil prices with their realised spot prices shows that the
average absolute error as a percentage of the average price was
close to 5% between January 2011 and March 2013.
Box fgure Average monthly crude oil prices, spot vs
futures
80
90
100
110
120
0
4
8
12
16
Forecast error
WTI crude 1–month futures price
WTI crude spot price (actual)
Mar
13
Jan
13
Nov
12
Sep
12
Jul
12
May
12
Mar
12
Jan
12
Nov
11
Sep
11
Jul
11
May
11
Mar
11
Jan
11
Price ($ per barrel) Absolute % of actual price
Average of forecast error
(absolute, as % of actual price): 4.7%
Source: Estimates based on data from EIA Short-Term Energy Outlook database
(http://www.eia.doe.gov/steo/cf_query/index.cfm), accessed 6 June 2013.
Click here for chart data
The forecasts of the IMF and World Bank, on which GSDP draws,
are anchored in analysis and market information, but there is a
range of other views about the future trajectory of hydrocarbon
prices. A high degree of dissonance among analysts would
certainly caution against placing too much weight on any single
forecast. But equally, convergent beliefs are no guarantee of
outcomes in oil or any other market. The box table collates recent
forecasts of oil and gas prices.
Based on these data the “consensus view” is that oil prices will be
trending down in the outlook period. The consensus average oil
price (WTI and UK Brent) for 2013 is $101.75 per barrel, just shy of
the IMF and World Bank forecasts for 2013. There is, however, a
substantial dispersion in the forecasts for all prices. UK Brent prices
show a $22 dispersion among forecasts for 2013, and $26.5 for 2014.
A comparatively narrow dispersion of just $9 for WTI in 2013 widens
to $25 in 2014. For both Brent and WTI, there are more outliers
above the consensus average/median than below it.
The consensus view on natural gas is that US Henry Hub prices will
climb to $3.8 per mmbtu in 2013 and exceed $4 per mmbtu in 2014.
Forecasts for gas prices are sparse, however, refecting the absence
of an established global trading platform for gas and market
segmentation, leading to a wide variety of prices. The forecasts
available are mostly for US Henry Hub prices as US gas sales are
made on the spot market, as opposed to via long-term oil-linked
contracts, which are more difcult to predict.
Box table Poll of oil and gas prices, 2013 and 2014, as of 30 May 2013
Economic forecaster Oil ($/bbl) Gas ($/mmbtu)
UK Brent WTI
2013 2014 2013 2014 2013 2014
ABN AMRO (Apr 2013) 105.0 100.0 90.0 90.0 3.9 4.5
Bank of America Merrill Lynch (Apr 2013) 110.0 112.0 90.0 92.0 3.9 ...
Barclay's (May 2013) 112.0 125.5 95.0 ... ... ...
BNP Paribas (Apr 2013) 108.0 108.0 95.0 97.0 ... ...
Business Monitor Inernational (Feb 2013) 107.0 99.0 92.0 91.0 ... ...
Citigroup (Apr 2013) 104.0 ... 90.0 ... ... ...
Commerzbank (Apr 2013) 120.0 ... ... ... ... ...
Credit Suisse (Apr 2013) 112.0 110.0 98.0 100.0 3.7 4.2
Danske Bank (Apr 2013) 113.0 106.0 98.0 98.0 ... ...
Deloitte (Mar 2013) 102.0 105.0 92.0 90.0 3.7 4.0
GAIN Capital (May 2013) 108.0 ... 92.0 96.0 ... ...
Goldman Sachs (Apr 2013) 105.0 ... ... ... 4.4 4.3
Institute of International Finance (May 2013) 108.0 108.0 ... ... ... ...
JP Morgan Chase & Co. (Jan 2013) 115.0 122.5 99.0 115.0 ... ...
Morgan Stanley (Mar 2013) 123.0 118.5 ... ... 3.7 ...
Noreda (Mar 2013) 112.0 115.0 ... ... ... ...
Oxford Economics (Sep 2012) 101.3 106.4 ... ... ... ...
Samba (Mar 2013) 107.0 103.0 ... ... ... ...
Scotiabank (Mar 2013) 112.0 112.0 94.0 96.0 3.8 4.0
Societe Generale (Mar 2013) 112.0 ... 96.0 ... 3.7 ...
US Energy Information Administration (May 2013) 105.9 100.8 93.2 92.3 3.8 4.0
Consensus (mean) 109.6 109.5 93.9 96.1 3.8 4.2
Median 108.0 108.0 93.6 96.0 3.8 4.1
High 123.0 125.5 99.0 115.0 4.4 4.5
Low 101.3 99.0 90.0 90.0 3.7 4.0
Standard deviation 5.4 7.8 3.1 7.1 0.2 0.2
Coefcient of variation (%) 5.0 7.1 3.3 7.4 6.0 4.8
Memo items 2013 2014
Consensus average (UK Brent and WTI) 101.7 102.8
International Monetary Fund (Apr 2013)
a
102.6 97.6
World Bank (Jan 2013)
a
102.0 102.2
a Average of Brent, Dubai Fateh and WTI. ... = No estimates for particular year/indicator. bbl = barrel.
Source: Consolidated from various reports and news articles.
20
Qatar Economic Outlook 2013–2014
21
Part 2 Performance in 2012
GDP growth
Aggregate analysis
Qatar’s economy expanded by 6.2% in real (volume)
terms in 2012 (fgure 2.1), according to provisional
estimates from the Qatar Statistics Authority (QSA). In
nominal (value) terms, it grew by 12.2%. The diference
between the growth rates is due to the 6% gain in the
price of Qatar’s aggregate output basket in 2012, which
largely refects higher oil and gas prices. Qatar’s real
growth in 2012 converged closer to norms in the Gulf
Cooperation Council (GCC) countries (fgure 2.2).
Given the hydrocarbon price gains, expansion of real
income is likely to have exceeded volume output growth
(box 2.1). By the close of 2012, the size of the economy
was $192.4 billion (in current prices) (fgure 2.3).
Refecting the culmination of a successful investment
programme in liquefed natural gas (LNG), oil and gas
production contributed only marginally to overall
growth in 2012 (fgure 2.4). Hydrocarbon output grew by
just 1.7%, down from a hefty 7% in 2011.
In earlier years, expansion in LNG production had
propelled growth, but having almost saturated installed
capacity by end-2011, LNG output saw only incremental
gains in 2012. The bulk of oil and gas growth in 2012
came from higher output of condensate, a valuable
hydrocarbon liquid extracted from raw gas.
In 2012, and for the frst time, Qatar’s condensate output
was larger than its oil production. With hydrocarbon
Qatar’s non-oil and gas economy performed strongly in 2012, supporting overall GDP growth of
6.2%. Although expansion in upstream oil and gas production was just 1.7%, favourable movements
in the price of Qatar’s hydrocarbon output basket helped lift nominal growth to 12.2% for the year.
Manufacturing witnessed vigorous growth with further expansion of refning and petrochemicals.
The tempo of construction activity was slower than some had anticipated, but the sector still
advanced by over 10%. Within services, transport and communications rose by a lively 12.2%.
Consumer price infation accelerated through the year, triggered largely by a resumption of rising
rents, particularly in the afordable and mid-priced segments of the market. The fscal and current
account balances were sizeable. The realised fscal surplus was higher than budgeted, partly
because actual prices for Qatar’s hydrocarbon output basket exceeded those on which the budget
was planned, and partly because of a marked shortfall of disbursements on capital projects.
Figure 2.1 Nominal and real GDP growth (%)
-20
-10
0
10
20
30
40
50
Real Nominal
2012 2011 2010 2009 2008
44.6
17.7
12.0
-15.2
16.7
27.9
13.0
37.0
6.2
12.2
Source: GSDP estimates based on QSA release dated 29 April 2013 (http://
www.qsa.gov.qa/eng/index.htm).
Click here for chart data
Figure 2.2 Real GDP growth, GCC countries (year-on-
year change, %)
-10
-5
0
5
10
15
20
25
30
United Arab Emirates Saudi Arabia Qatar
Oman Kuwait Bahrain
2012 2011 2010 2009 2008 2007 2006
Source: IMF, World Economic Outlook April 2013 database (http://www.imf.org/
external/pubs/ft/weo/2013/01/weodata/download.aspx), accessed 17 April 2013.
Click here for chart data
22
Qatar Economic Outlook 2013–2014
Box 2.1 Income and terms of trade
Volume, or real, measures of GDP do not adequately
capture changes in the aggregate resources of the Qatari
economy, as the diminishing nature and the eventual
depletion of the stock of the main resources of the country
(oil and gas underground) are not refected in real GDP.
The exploitation of these resources converts one type of
resource (hydrocarbons) into another (foreign exchange).
Thus the overall level of resources in any period does not
change as a result of extraction and export. Over time,
however, the underground resources dwindle, raising
complex questions about the optimal rate of depletion,
and choices about today’s consumption versus saving and
investment to support future consumption.
A more appropriate measure of income that takes into
account resource fows into and out of the country is the
gross national disposable income adjusted for depreciation
of capital stock and depletion of oil and gas resources. A
still broader concept, sometimes referred to as genuine
progress indicators, would incorporate changes in social
and environmental capital too. Such statistical adjustments,
though far from straightforward, would be important
in assessing whether Qatar’s development trajectory is
“sustainable”.
Changes in the price of Qatar’s exports (which are strongly
correlated with the price of oil) relative to movements
in the price of its import basket—that is, changes in the
terms of trade—can generate signifcant income efects
(which flter into the economy through higher public
and private consumption and investment). In the case of
Qatar where the combined value of imports and exports
amounts to over 104.1% of nominal GDP, such impacts can
be substantial.
GSDP estimates suggest that favourable terms-of-trade
movements were an important source of income growth
from 2006 to mid-2008, but that some of these gains were
surrendered in 2009. From 2010 through to 2012 Qatar’s
terms of trade again improved, with rising oil prices.
However, to gauge the full impact of oil and gas exports on
Qatar’s income, the cumulative efect of the terms-of-trade
changes since the inception of oil and gas extraction and
export should be measured, because changes in a single
year can underestimate the longer-term impact of the terms
of trade on Qatar’s income and on the wealth created by
that income.
Figure 2.3 Nominal GDP ($ billion)
115.3
97.8
125.1
171.5
0
50
100
150
200
2012 2011 2010 2009 2008
192.4
Source: GSDP estimates based on QSA release dated 29 April 2013 (http://
www.qsa.gov.qa/eng/index.htm).
Click here for chart data
Figure 2.4 Contributions to real GDP growth
(percentage points)
0
5
10
15
20
Services Construction Electricity and water
Manufacturing Hydrocarbons Real GDP
2012 2011 2010 2009 2008
17.7
12.0
1õ.7
13.0
õ.2
5.1
õ.3
1.õ
5.9
8.2
0.8
1.2
1.9
2.8
1.õ
1.1
11.õ
3.9
1.1
0.9
7.0
3.4
1.1
1.0
0.8
Note: Hydrocarbons include crude oil and gas extraction under mining
and quarrying. Services include transport and communications, trade and
hospitality, fnancial, government, household and social services.
Source: GSDP estimates based on QSA release dated 29 April 2013 (http://
www.qsa.gov.qa/eng/index.htm).
Click here for chart data
Figure 2.5 Hydrocarbons and non-hydrocarbons, share
in real GDP (%)
0
20
40
60
80
100
Hydrocarbons Non-hydrocarbons
2012 2011 2010 2009 2008
43.0
57.0
40.2
59.8
44.4
55.õ
45.5
54.5
43.5
5õ.5
Note: Hydrocarbons include crude oil and gas extraction under mining and
quarrying.
Source: GSDP estimates based on QSA release dated 29 April 2013 (http://
www.qsa.gov.qa/eng/index.htm).
Click here for chart data
growth ebbing, the share of oil and gas in aggregate
output slipped in 2012 in real and nominal terms (fgures
2.5 and 2.6), although the nominal decline was checked
somewhat by the price gain in the hydrocarbon output
basket.
Non-hydrocarbon sectoral breakdown
In 2012, manufacturing output grew by 11.8% (fgure 2.7).
Yet despite this strong growth, the sector’s share in
aggregate output remained modest at 8.7%, and
manufacturing contributed just 1 percentage point of
overall growth.
23
Part 2 Performance in 2012
Figure 2.6 Hydrocarbons and non-hydrocarbons, share
in nominal GDP (%)
0
20
40
60
80
100
Hydrocarbons Non-hydrocarbons
2012 2011 2010 2009 2008
54.9
45.1
44.8
55.2
52.õ
47.4
59.3
40.7
57.8
42.2
Note: Hydrocarbons include crude oil and gas extraction under mining and
quarrying.
Source: GSDP estimates based on QSA release dated 29 April 2013 (http://
www.qsa.gov.qa/eng/index.htm).
Click here for chart data
Figure 2.7 Manufacturing output
19.1
0
5
10
15
20
25
30
35
0
5
10
15
20
25
30
35
QR billion Growth (%)
2012 2011 2010 2009 2008
31.5
28.2
25.5
21.7
Note: Output is measured in constant prices.
Source: GSDP estimates based on QSA release dated 29 April 2013 (http://
www.qsa.gov.qa/eng/index.htm).
Click here for chart data
Figure 2.8 Construction output
26.5
0
10
20
30
40
50
60
70
80
90
0
10
20
30
40
50
60
70
80
90
QR billion Growth (%)
2012 2011 2010 2009 2008
28.4
31.0
37.9
34.3
79.2
6.9 9.5
10.5 10.6
Note: Output is measured in constant prices.
Source: GSDP estimates based on QSA release dated 29 April 2013 (http://
www.qsa.gov.qa/eng/index.htm).
Click here for chart data
Box 2.2 Summary of monetary, fnancial and
institutional developments, 2012–2013
2012
October. Qatar Exchange (QE) won the “Exchange of the Year”
award for the Middle East from Global Investor magazine,
while the Qatar Financial Centre Authority received the “Best
Financial Centre in the Middle East” award from the magazine
for the second year running.
November. Qatar Investment Authority used its near 12% stake
in mining group Xstrata Plc to support the takeover by global
commodities player, Glencore, securing better terms for the
entity than originally ofered.
December. The Qatar Financial Information Unit (QFIU)
launched its strategy for 2013–2017. The QFIU is a specialised
government agency, created in October 2004, to deal with
problems of money laundering and fnancial crimes. Over the
years the unit has developed its protective “fnancial watchdog”
role while introducing fnancial-control initiatives and projects
relating to national risk assessment and evaluation. It has
carried out these initiatives in compliance and partnership with
the National Anti-Money Laundering and Terrorist Financing
Committee. The QFIU is a member of the “Egmont Group”, a
network of similar bodies covering over 100 countries.
Qatar National Bank (QNB) became the frst commercial bank
in Qatar to launch a Debt Fund. This fund allows investors to
invest in debt securities that are directly issued by sovereign
and corporate entities based in GCC countries.
Law No. 13 of 2012 was decreed, which regulates the
functioning of Qatar Central Bank (QCB), which is deemed an
autonomous corporate body with responsibility for its own
budget and capital of QR50 billion. It is now owned by the
government, and reports directly to H.H. the Emir.
2013
January. The Qatar Credit Bureau announced that all
commercial banks would have direct access to clients’ (and
borrowers’) credit information and details. This move will
facilitate due diligence and permit commercial banks to
establish creditworthiness of potential clients. It should also, in
the medium term, reduce the number of write-ofs and debt
defaults on personal fnancial obligations.
March. QCB announced that it would issue local currency
debt every quarter of QR4 billion, split into QR3 billion in
conventional bonds with three-year maturity and QR1 billion
Islamic bonds, or sukuk, with fve-year maturity. The
principal objective is to ensure better liquidity management
in the banking system, extend the yield curve and to
provide options for domestic fnancing in view of funding
and business needs related to Qatar’s large pipeline of
infrastructure investments.
The same month QCB carried out its frst issuance along those
lines. The issuance was allocated directly to local commercial
banks: the three-year tranche yielded 2.75%, the fve-year 3%.
May. QCB reported that in the frst quarter of 2012, Islamic
banks in Qatar had raised QR8 billion through issuing sukuk,
with investments by commercial banks holding Islamic bonds
reaching QR47 billion that quarter.
The Advisory Council (Shura) approved a draft law for the
establishment of a Health and Education Fund with working
capital of QR360 billion. The capital will be funded directly
through government revenues, annually. The main aim is
to provide sustainable fnancial resources and support for
developing the country’s health and education sectors.
June. As in March, QCB successfully issued the quarter’s
QR4 billion of local currency debt.
24
Qatar Economic Outlook 2013–2014
Manufacturing in Qatar is dominated by vertically
integrated downstream refning and processing, which
includes high-quality gas-to-liquid (GTL) fuels at the
world’s largest GTL plant—Pearl—and the smaller
Oryx facility. Additions to manufacturing capacity have
also allowed modest expansion in petrochemicals.
Downstream activity (including fertilisers) registered
40.1% growth in 2012.
Outside the hydrocarbon value chain, manufacturing
of basic iron and steel grew by 8.8%, in part due to
the expansion of Qatar Steel and development of
manufacturing works in Mesaieed, south of Doha.
Construction grew by 10.6% in 2012, sustaining the
momentum established in the previous two years
(fgure 2.8 above), and making a modest contribution
to aggregate growth. While robust, growth fell short
of the most bullish forecasts. A variety of factors—
including lengthy regulatory and contracting processes,
coordination challenges with complex projects, and the
redesign of some infrastructure assets—conspired to
delay the start of some projects and to move others onto
a slower track.
With 9.2% expansion, services were the major
driver of growth in 2012, accounting for around half
(3.4 percentage points) of aggregate growth (see
fgure 2.4). The sector has a weight of over one third in
total output and comprises four subsectors, all of which
recorded steady growth in 2012 (fgure 2.9), aided by a
rising population (fgure 2.10).
The transport and telecommunications subsector
grew by a lively 12.1% in 2012, refecting feet and route
expansion by Qatar Airways as well as investments in the
domestic telecoms infrastructure. Qatar owns a modern
LNG tanker feet, and margins earned from the shipping
of gas contribute to services output.
Finance and real estate grew by 6.7% as rising incomes
and an expanding population lifted demand for fnancial
services, and as new real estate projects were released
on to the market. Within trade and hospitality, the
Qatar Tourism Authority reported that average hotel
occupancy rates improved from 2011, reaching 64%

in
2012.
Outside services, a rising population and growth in the
non-oil and gas economy also supported the 10.5%
expansion in the electricity and water sector in 2012.
Figure 2.11 Annual headline and core infation (%)
15.2
11.4
-4.9
-2.0
-2.4
2.2
4.6
1.9
3.6
1.9
-8
-4
0
4
8
12
16
Core Headline
2012 2011 2010 2009 2008
Note: Core infation is headline infation less food, rent and utilities.
Source: GSDP estimates based on data from Qatar Statistics Authority (QSA)
Qatar Information Exchange database (http://www.qix.gov.qa/), accessed
28 April 2013.
Click here for chart data
Figure 2.10 Indices for utilities, services and population
(2007 = 100)
0
20
40
60
80
100
120
140
160
180
Government, household and social services
Finance and real estate
Trade and hospitality
Population
Utlilities
2012 2011 2010 2009 2008 2007
151.3
176.0
166.7
153.4
159.3
Source: GSDP estimates based on QSA release dated 29 April 2013 (http://
www.qsa.gov.qa/eng/index.htm).
Click here for chart data
Figure 2.9 Services subsector growth (%)
Government, household and social services
Finance and real estate
Transport and telecommunications
Trade and hospitality
7.7
12.1
6.7
10.9
0
10
20
30
2012 2011 2010 2009 2008
51.0
Note: Output is measured in constant prices.
Source: GSDP estimates based on QSA release dated 29 April 2013 (http://
www.qsa.gov.qa/eng/index.htm).
Click here for chart data
25
Part 2 Performance in 2012
Prices
Consumer prices
Headline infation was maintained at 1.9% in 2012
(fgure 2.11 above), marginally below the 2.0% forecast
made in June 2012’s Qatar Economic Outlook. The rate
is measured by the average annualised percentage
diference in QSA’s consumer price index.
The rent, utilities and related housing services
component, which has a weight of over 30% in the
index, was down by 3.3% in 2012 from 2011, and
helped to ofset rising prices in other components:
transport and communications services were up by
2.3%; furniture, textiles and home appliances by 4.9%;
and entertainment, recreation and culture by 6.0%
(fgure 2.12).
Core infation saw an increase of 3.6% (see fgure 2.11).
This narrower measure excludes utilities, residential rent
and food (the most volatile components of the index).
Tame headline infation for the whole year masked
accelerating price increases (or a switch from declining
prices) as the year wore on. The pattern began to shift
in June 2012 when rents stopped declining, and became
frmer in the last quarter with a return to moderate rental
price infation: by end-2012, the rent, utilities and related
housing services component was 4.4% higher than
June’s trough. Measured year on year, the headline price
index in December 2012 was up by 2.6% on December
2011 (fgure 2.13).
The continued build-up of Qatar’s resident population
through December 2012 (up by 5.7% over December
2011) stimulated demand for rental properties,
supporting modest rental hikes in the lower and mid-
market segments of the market, where supply is tightest.
Producer prices
In 2012, the producer price index (box 2.3) rose by 6.6%
(fgure 2.14). Hydrocarbon prices staged gains of 8.3%, as
Qatar’s gas cargoes were redirected from lower-priced
European destinations to East Asia, where oil-indexed
prices for gas are higher. (Global benchmark oil prices
were little changed in 2012, however.) The prices of
refned petroleum products and petrochemicals,
Figure 2.12 Annual infation (%)
20.0
-15
-10
-5
0
5
10
15
20
25
Miscellaneous goods and services
Entertainment, recreation and culture
Transport and communications
Medical care and health services
Furniture, textiles and home appliances
Rent, utilities and related housing services
Clothing and footwear
Food, beverages and tobacco
Consumer price index
2012 2011 2010 2009 2008
-12.7
-3.3
1.2
-12.0
4.2
7.7
-4.9
15.2
-4.9
1.9 1.9
-2.4
Source: Qatar Statistics Authority (QSA) Qatar Information Exchange database
(http://www.qix.gov.qa/), accessed 28 April 2013.
Click here for chart data
Figure 2.13 Monthly headline infation (year on year, %)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Dec12 Oct12 Jul 12 Apr12 Jan 12 Oct 11 Jul 11 Apr 11 Jan 11
1.5
2.4
1.2
2.7
2.6
2.2 2.2
2.6 2.6
Source: GSDP estimates based on QSA release dated 28 April 2013 and from
Qatar Information Exchange database (http://www.qix.gov.qa/).
Click here for chart data
Figure 2.14 Producer price index growth (%)
-45
-30
-15
0
15
30
45
Manufacturing
Energy and utilities
Hydrocarbons
Producer prices
2012 2011 2010 2009 2008
33.9
-32.6
19.2
34.6
6.6
39.1
-1.0
40.6
5.9
-35.0
0.2
22.0
3.8
-0.1
8.3
Source: GSDP estimates based on QSA release dated 3 October 2012 and from
Qatar Information Exchange database (http://www.qix.gov.qa/), accessed
29 April 2013.
Click here for chart data
Box 2.3 The producer price index
QSA released this index for the frst time in 2010.
Producer prices refect what domestic producers receive
for their output (net of taxes plus subsidies) and cover
hydrocarbons, energy and utilities, and manufacturing.
26
Qatar Economic Outlook 2013–2014
which have a substantial weight in the manufacturing
component of the producer price index, were broadly
fat in 2012, having made signifcant gains in 2011.
Asset markets: Equities and property
Qatar Exchange. QE is the domestic trading platform
for equities (and see box 2.2 above). The QE Index, a
benchmark index of the largest, and most liquid, 20
stocks, ended 2012 at 8,359, down 420.1 points (4.8%)
from December 2011.
The performance of equities in Qatar bucked both the
global and wider regional trends in 2012 (fgure 2.15),
where gains were the norm in the second half of
2012. Programmes of central bank purchases of debt
(quantitative easing) that expanded liquidity and
sustained historically low interest rates in advanced
countries supported global equity market advances.
Qatar’s equity market was largely unafected by these
wider infuences. For the majority of stocks, a cap of 25%
exists on foreign ownership and foreign institutional
interest has been limited by the continued classifcation
of Qatar as a “pioneer market” by Morgan Stanley Capital
International (although this was changed to “emerging”
in June 2013 —see box 1.5 in part 1).
It appears that local factors—including caution on the
proft outlook for major markers—rather than global
forces exercised a more important infuence on Qatar’s
market movements in 2012.
Lower trading volumes accompanied lower equity
prices in 2012: the value of stocks traded declined by
14.4%. Trading in the services component of the index
declined by 33.8%. There was no change in the number
of companies listed on QE during 2012—43. Total
market capitalisation inched up during 2012 to reach
QR460 billion.
Real estate. In January 2013, QCB released a Real Estate
Price Index, with fscal year 2009/10 (April–March) as
the base. It showed that real estate prices at the end of
2012 were 5.8% higher than a year earlier (fgure 2.16).
The average of the index for 2012 (150.2) is still 22% lower
than the peak seen in August 2008 (192.2) but points to
substantial recovery since the lows of 2009. These fgures
broadly mirror those that can be detected in the rental
market using consumer price information.
Reporting on the frst half of 2012, data from Business
Monitor International suggest that industrial rents
jumped (year on year) by 78.2%, retail rents climbed by
39.9%, and ofce rents rose by 10% (fgure 2.17).
Figure 2.15 GCC stock price indices and S&P Global
index (year-on-year change, %)
-25
-20
-15
-10
-5
0
5
10
15
20
25
30
35
S&P Global 100
Bahrain (BSE Index)
Kuwait (KSE Index)
UAE (Dubai Financial Market)
UAE (Abu Dhabi Index)
Saudi Arabia (TSA Index)
Oman (MSM 30)
QE Index
Jan 13 Oct 12 Jul 12 Apr 12 Jan 12 Oct 11 Jul 11 Apr 11 Jan 11
Sources: Qatar Exchange (http://www.qe.com.qa/pps/qe/qe%20english%20
portal/Pages/Home/) and CEIC database, accessed 29 April 2013.
Click here for chart data
Figure 2.16 QCB real estate price index
148.8
157.4
0
20
40
60
80
100
120
140
160
180
200
Mar 13 Dec 12 Sep 12 Jun 12 Mar 12 Dec 11
Source: Qatar Central Bank (http://www.qcb.gov.qa/English/Publications/
Statistics/RealEstate/Pages/RealEstatePriceIndex.aspx), 28 April 2013.
Click here for chart data
Figure 2.17 Real estate rentals, Doha (QR per square
metre per month)
263
150
165 163
228
79
55
98
0
100
200
300
400
Jan–Jun 2012
Jul–Dec 2011
Jan–Jun 2011
Jul–Dec 2010
Jan–Jun 2010
Industrial Retail Office
Note: Rental rates are average of minimum and maximum. The index captures
transactions, making no allowance for the quality and location of the
underlying real estate assets, nor incorporating the price of the underlying
stock. No data for Jul–Dec 2012 nor Jan–Jun 2013.
Source: Business Monitor International, Qatar Real Estate Report, various issues.
Click here for chart data
27
Part 2 Performance in 2012
Interest rates and credit
Ofcial interest rates saw no changes in 2012 or in the
frst fve months of this year, staying at levels last reset
in August 2011—the overnight lending rate at 4.5% and
the overnight deposit rate at 0.75%. Given the peg of the
Qatari riyal to the US dollar and an open capital account,
the deposit rate is tightly linked to comparable US dollar
rates.
Due to vigorous growth of loans to public sector entities
(which include government, government institutions
and semi-government bodies —fgure 2.18), overall credit
expanded by 33.5.% in the year to December 2012. Bank-
fnanced spending on large public sector infrastructure
works by government institutions drove much of this
expansion (fgure 2.19).
Commercial banks’ credit to the private sector in
December 2012 was 13.5% higher than a year earlier
(fgure 2.20). There was also a marked slowing in the
growth of consumer lending in 2012. Here, too, tighter
controls on commercial banks helped to contain growth
of consumer credit, with year-on-year growth of just
4.5% by December 2012.
Fiscal accounts
At the close of FY2012/13, the government’s overall
surplus (its revenue less the sum of current and capital
expenditure) was estimated at QR73.0 billion (table 2.1
and fgure 2.21), an increase of QR53.4 billion on the
FY2011/12 outcome. Relative to nominal GDP, the surplus
measured 10.4%. Realised revenues were higher than
those initially programmed in the FY2012/13 budget,
largely because actual oil prices in the fscal year
exceeded the conservative $65 per barrel planning
assumption. Conversely, actual spending fell far short
of budgetary provisions, with all of that refecting lower
than budgeted capital spending.
Figure 2.18 Total credit, private and public sector
growth components
0
100
200
300
400
500
0
30
60
90
120
150
Private sector growth Public sector growth Total
Jan 13 Sep 12 May 12 Jan 12 Sep 11 May 11 Jan 11 Sep 10 May 10 Jan 10
QR billion Growth (year on year, %)
Sources: QCB, Quarterly Statistical Bulletin, March 2013 and CEIC database,
accessed 29 April 2013.
Click here for chart data
Figure 2.19 Commercial banks’ public sector credit
0
50
100
150
200
250
0
50
100
150
200
250
Growth
Semi-government institutions
Government institutions
Government
Sep 12 May 12 Jan 12 Sep 11 May 11 Jan 11 Sep 10 May 10 Jan 10
QR billion year on year, %
46.5
Note: Public sector includes government, government institutions (companies
fully owned by government) and semi-government bodies (companies with
50% government ownership).
Sources: QCB, Quarterly Statistical Bulletin, March 2013 and CEIC database,
accessed 29 April 2013.
Click here for chart data
Figure 2.20 Growth of commercial banks private sector
credit (year-on-year change)
4.5
-20
-10
0
10
20
30
40
50
60
Others (industry, services, others)
General trade
Consumption
Contractor and real estate
Total
Oct
12
Jul
12
Apr
12
Jan
12
Oct
11
Jul
11
Apr
11
Jan
11
Oct
10
Jul
10
Apr
10
Jan
10
13.5
Sources: QCB Quarterly Statistical Bulletin, March 2013 and CEIC database,
accessed 29 April 2013.
Click here for chart data
Table 2.1 Government spending and revenue, budget and
actual, FY2011/12 and FY2012/13 (QR billion)
FY2011/12 FY2012/13
Budget Actual Budget Actual
Total expenditure 139.9 158.9 178.6 158.1
Current 81.9 113.4 116.5 116.6
Capital 58.0 45.5 62.1 41.5
Total revenue 162.5 178.5 206.3 231.2
Surplus 22.5 19.6 27.7 73.0
Note: Surplus may not sum owing to rounding.
Source: GSDP estimates based on data from the Ministry of Economy and Finance
(MOEF).
28
Qatar Economic Outlook 2013–2014
Government spending
The budget for FY2012/13 programmed an increase in
spending of 27.6% over the previous year’s budget (and
12.4% more than actual spending in FY2011/12). Nearly
all this increase was for capital projects (up 36.6% on
FY2011/12 outcomes)—mainly transport, drainage,
communications and utilities infrastructure—with only
a modest rise for recurrent outlays (2.7%). Contracting
by 8.9%, actual capital spending in FY2012/13 not only
missed the budget target by QR20 billion but also slipped
QR4 billion below the previous fscal year’s outcome.
The majority—65%—of planned outlays remained
on current expenditure. Covering wages and salaries,
interest payments, subsidies, foreign grants and
spending on goods and services, such expenditure
came in on broadly on target, expanding by 2.9%. The
government’s wage bill, which climbed strongly in
FY2010/11 after the September 2011 increase in wage
benefts for citizens, posted only a modest 5% rise.
In total, the planned spending increase in FY2012/13
failed to materialise, and actual government expenditure
growth was fat (fgure 2.22).
Government revenue
Total revenue accruing to government rose by 29.5%
in FY2012/13 over the previous fscal year’s outcome
(fgure 2.23). Oil and gas income rose by 12.5%, buoyed
by higher prices for Qatar’s hydrocarbon output basket
and a modest expansion of volumes. Realised oil and
gas revenues were about 42% higher than the budget
forecast.
Investment income (which accrues largely from profts
transferred by Qatar Petroleum to the MOEF) and “others”
including business and corporate income tax soared
in FY2012/13, by some 60% over the previous year. Part
of the increase is explained by revised accounting
procedures that now book Qatar Petroleum’s retained
profts (which formerly were kept on Qatar Petroleum’s
accounts) with the MOEF.
Non-hydrocarbon fscal balance
Oil and gas resources are exhaustible and Qatar will one
day have to look to other sources of income to meet its
needs. Removing direct oil and gas revenues from the
sources of government income allows estimation of the
non-hydrocarbon fscal balance—the gap between total
spending and fscal revenue that is not linked to oil and
gas production. This defcit indicates the resources that
will need to be mobilised from non-hydrocarbon sources
over the long run.
Figure 2.21 Overall fscal balance
31.6
0
10
20
30
40
50
60
70
80
% of nominal GDP QR billion
FY12/13 FY11/12 FY10/11 FY09/10 FY08/09 FY07/08
10.9
54.0
13.2
19.6
73.0
41.8
10.9 10.9 3.1
10.4
2.9
15.2
10.0
Note: The fscal year runs from 1 April to 31 March.
Source: MOEF.
Click here for chart data
Figure 2.22 Fiscal expenditure growth (%)
5.2
25.8
29.8
15.3
2.9
15.1
28.4
95.1
-1.5
12.7
-8.8
2.8
-10
0
10
20
30
Total Capital Current
FY12/13 FY11/12 FY10/11 FY09/10 FY08/09 FY07/08
15.0 16.0
24.0
11.3
-0.5
17.4
Note: The fscal year runs from 1 April to 31 March.
Source: MOEF.
Click here for chart data
Figure 2.23 Fiscal revenue growth (%)
27.6
-40
-20
0
20
40
60
80
Total Other Investment Oil and gas
FY12/13 FY11/12 FY10/11 FY09/10 FY08/09 FY07/08
12.6
18.1 17.0
3.5
13.1
46.6
-28.6
62.3 62.0
-33.0
9.6
-29.3
17.0
68.9
58.1
65.5
66.8
37.0
19.7
29.5
19.9
14.5
-7.8
Note: The fscal year runs from 1 April to 31 March.
Source: MOEF.
Click here for chart data
29
Part 2 Performance in 2012
A non-hydrocarbon fscal defcit of QR55.8 billion is
estimated for FY2012/13, equivalent to 8.0% of nominal
GDP, or somewhat less than the equivalent defcit in
FY2011/12. However, some of the revenue booked under
investment and taxes is directly linked to the activities
of entities that derive their income from oil and gas
production, and if this income were also netted out, the
non-hydrocarbon defcit would be larger.
Debt
Government debt inched up in FY2012/13, reaching
QR293.2 billion excluding guarantees, equivalent to an
estimated 41.9% of nominal GDP (fgure 2.24). There was
no increase in government foreign obligations over the
fscal year and the small increase in domestic borrowing
came from a continuing programme of issuance of
domestic bonds and Treasury bills.
As the government runs large surpluses, these local
currency issuances are not needed for budgetary
fnancing purposes, but rather help to support the
development of a domestic capital market. (Estimates
of government debt do not include the domestic or
foreign currency borrowings of semi-government
institutions, which rose steeply in 2012—see Interest
rates and credit, above.)
Trade and foreign currency reserves
Preliminary estimates show that Qatar once more
recorded a sizeable trade surplus in 2012—45.5% of
nominal GDP—on this measure slightly up on 2011’s
outcome (44.7%). Higher LNG prices were the main
factor in the higher value of exports, which rose by 18.0%
relative to 2011. Imports increased faster than exports, at
24.4%, but from a far smaller base (fgure 2.25).
The current account surplus, too, stayed substantial in
2012 (fgure 2.26). Up by QR37.7 billion on 2011, it climbed
from 30.3% to 32.4% as a share of nominal GDP. As in
previous years, the large trade surplus ofset a defcit on
the services (QR50.9 billion) and income (QR44.2 billion)
accounts.
As in 2011 the combined defcit on the income and
services accounts is primarily due to large remittance
outfows (profts and wages). A GSDP estimate of the
dividend income accruing to the Qatar Investment
Authority (QIA) provides a partial ofset to these outfows.
Total investment income receipts are estimated at
QR23.7 billion in 2012, an increase of QR1.3 billion over 2011.
QCB’s foreign currency reserves stood at QR120.4 billion
at end-December 2012, up by QR59.5 billion on the
Figure 2.24 Total government debt
0
50
100
150
200
250
300
0
10
20
30
40
50
% of GDP External
Domestic
FY12/13 FY11/12 FY10/11 FY09/10 FY08/09 FY07/08
12.1
10.7
28.4
8.8
65.3
60.8
70.3
124.1
95.3
193.5
95.4
197.8
7.8
42.1 8.9
35.4
42.7
46.3
41.9
QR billion %
Note: The fscal year runs from 1 April to 31 March.
Source: MOEF.
Click here for chart data
Figure 2.25 Total trade growth
Growth (%) QR billion
-100
0
100
200
300
400
500
600
-100
0
100
200
300
400
500
600
Import growth
Export growth
Imports
Exports
2012 2011 2010 2009 2008
205
524
26.8
19.1
41.9 41.9 50.1
18.0
41.9 41.9 68.3
41.9 41.9 -13.3
41.9 41.9 -10.7
41.9 41.9 42.4 41.9 41.9 27.4
41.9 41.9 24.4
Sources: Data for 2008 and 2009 are GSDP estimates based on data from QSA’s
Qatar Information Exchange (http://www.qix.gov.qa). Data for 2010, 2011 and
2012 are GSDP estimates based on QCB balance-of-payments data.
Click here for chart data
Figure 2.26 Current account
41.7
14.4
96.8
23.3
226.9
189.2
86.6
23.1
0
40
80
120
160
200
240
0
7
14
21
28
35
42
QR billion % of GDP
2012 2011 2010 2009 2008 2007
32.4
6.5
19.0
30.3
Note: Data are GSDP estimates based on QCB balance-of-payments data.
Source: QCB (http://www.qcb.gov.qa/English/Publications/Statistics/
BalanceofPayments/Pages/default.aspx).
Click here for chart data
30
Qatar Economic Outlook 2013–2014
previous year. This doubling of reserves in 2012 refected
a decision by QCB to allocate an increasing proportion of
the surplus to short-term, liquid foreign currency assets.
Terms of trade and the real efective
exchange rate
The real efective exchange rate (REER) provides a
measure of competitiveness for a country’s output
in the global market place. It captures movements in
the nominal efective exchange rate and adjusts for
diferential price infation among countries.
GSDP estimates suggest that Qatar’s REER depreciated
by 1.9% in 2012 (fgure 2.27). This occurred because the
US dollar, to which the riyal is pegged, lost value against
the currencies of Qatar’s major trading partners. The
continuing trend of low infation in Qatar—lower than
in its major trading partners—also contributed to the
depreciation of the REER.
Figure 2.27 Real efective exchange rate index
(2005 = 100)
13.9
-1.9
4.0
0.4
-7.8
11.5
125.5
132.2
-10
-5
0
5
10
15
115
120
125
130
135
140
145
Growth (%) REER (2005=100)
2012 2011 2010 2009 2008 2007
Index
140.0
129.1
129.5
134.8
%
Source: GSDP estimates.
Click here for chart data
31
Part 2 Performance in 2012
32
Qatar Economic Outlook 2013–2014

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